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1. Inflation lowers the standard of living of the poor people because in inflation___________
a. There is a redistribution of assets from the financial sector to the real sector.
b. There is high population growth causing the per capita GDP to decrease.
c. The inflation rate is higher than the rate of wage increase
d. There is an increase in the cost of production as expected profit rate declines
The rate of increase in wages is lower than the rate of inflation: c. The inflation rate is higher than the rate of wage increase
2. According to the modern Phillips curve relationship, one percent decrease in the wage rate is equivalent to----
a. One percent increase in the marginal product
b. One percent decrease in the price level so that the percentage change in price level is same as percentage change in money wage rate
c. One percent increase in the price level
d. One percent decrease in the unemployment rate so that the Phillips Curve is a 45 degree angle line
decrease in the wage rate leads to decrease in the unemployment level: d. One percent decrease in the unemployment rate so that the Phillips Curve is a 45 degree angle line
3. An implication of the Phillips curve relationship is that-----
a. The government policies can decrease inflation and unemployment simultaneously
b. Increases in wage rates are offset by decreases in inflation rate
c. If the government chooses to decrease inflation, unemployment will increase and vice versa.
d. The expansionary ...
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