QUESTION 10 One benefit of inflation is the following everyone's nominal wages increase as a result 0000 everyone's real wages increase as a result even if nominal wages are downward rigid, real wages can increase thus reducing unemployment even if nominal wages are downward rigid, real wages can decrease thus reducing unemployment

QUESTION 10 One benefit of inflation is the following everyone's nominal wages increase as a result 0000 everyone's real wages increase as a result even if nominal wages are downward rigid, real wages can increase thus reducing unemployment even if nominal wages are downward rigid, real wages can decrease thus reducing unemployment

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter21: Unemployment

Section: Chapter Questions

Problem 6SCQ: Is the increase in labor force participation rates among women better thought of as causing an...

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The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.
The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=940, year 2=970, year 3=1000, and year 4=1070. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the inflation rate based on the first price index. If you had used the other price index, would you get a different inflation rate? If you are unsure, do the calculation and find out.
Unemployment rates have been higher in many European countries in recent decades than in the United States. Is the main reason for this long-term difference in unemployment rates more likely to be cyclical unemployment or the natural rate of unemployment? Explain briefly.
If, over time, wages and salaries on average rise at least as fast as inflation, why do people worry about how inflation affects incomes?
Is the increase in labor force participation rates among women better thought of as causing an increase in cyclical unemployment or an increase in the natural rate of unemployment? Why?
Inflation rates, like most statistics, are imperfect measures. Can you identify some ways that the inflation rate for fruit does not perfectly capture the rising price of fruit?