Question 4 (1 point) B Which of the following would lead to wage-push inflation?

Question

Question 4 (1 point) B Which of the following would lead to wage-push inflation? A) Producers are able to pass a wage increase on to the consumer in the form of higher prices B) Aggregate demand increases significantly. C) The economy experiences an inflationary gap. D) The economy experiences a trend of wage increases below labour productivity increases Save Question 5 (1 point) what is the real rate of interest if the nominal rate of interest is 10% and the rate of inflation is 4%? OA) 2.5%. 0 B) 40% OC) 6%. OD) 14%. 0 E) It cannot be determined. Save Question 6 (1 point) B Which of the following is an example of a frictionally unemployed person? A) A recent commerce graduate seeking her first job. B) A middle-aged man who, having quit his previous job, is searching for something more satisfying. C) A pulp-mill worker is laid off because of a recession. D) A contract college instructor who has left her job for a year and is looking for work at another college.

Explanation / Answer

Wage push inflation is caused by the factor that many a time the producers or the industry to improve their effeciency and productivity increases the wages of the workers to attract talent.This act will also lead to an increase in the price of the product that the consumer will buy.Producers are able to pass a wage increase to the consumer in the form of higher prices leads to wage push inflation. To get the real interest rate we have to substract the inflation rate from nominal interest rate.Thus given Nominal interest rate=10% and inflation rate=4%...SO Real interest rate=10%-4%=6%.Thus the real interest rate is 6%. Frictional unemployment refers to the situation when the workers remain without job for a definite period of time that results from shifting from one job to another.It refers to the unemployment that results from time spent between jobs may be for searching another job.For example a contract college instructor who has left her job for a year and is looking for work in another college.

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