In the following examples, who would be best off with unexpected inflation? A un

Question

In the following examples, who would be best off with unexpected inflation? A union worker whose contract specifies wage increases for the next five years A retiree living off of fixed interest from a bank account A couple paying off a variable-rate mortgage A government employee getting salary increases every other year A student paying of a fixed-interest student loan "Real income" refers to the net income received after taxes are paid. The net income received after both taxes and other deduction are paid. Income before being adjusted for inflation. Income relative to family size. The purchasing power of income. The measure of the real rate of interest is: Nominal rate of interest plus inflation = real rate of interest % change in the real rate of interest = % change in the nominal rate of interest - inflation The rate of interest - rate of income growth Inflation is defined as rapid growth in the economy. rise in the unemployment rate. prevalence of overcharging of prices. an overall movement upward in prices. Nominal income is the average amount of a paycheck normative amount that a worker should be paid dollar value of pay before adjustments for inflation purchasing power of income. maximum amount a worker can be paid. Some revenues and expenditures automatically change as the economy booms or slumps. Examples include: Income tax revenue Unemployment insurance tax revenue Discretionary spending Both B and C Both A and B When the government spends more than it collects in taxes, it will have a: Balanced budget Budget deficit Budget surplus Structural unemployment occurs because: The economy is in recession There may be a mismatch between the skills that some workers have and skills in demand by employers Some industries, such as manufacturing have undergone technological change rendering some skills obsol both B and C arc correct both A and B arc correct

Explanation / Answer

8. e

9. e

10. b

11. d

12. c

13. d

14. b

15. b

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