6. Assume that both union and management representatives agree to wage increases because they expect prices to rise 10 percent during the next year. Explain why the unemploy- ment rate will probably increase if the actual rate of inflation next year is only 3 percent.

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6. Taylor just received a 3% pay increase but the current rate of inflation is 4%. We can say that Taylor’s real wage has   Select one: a. remained the same b. fallen by 1% c. risen by 1%.

3. Explain any three costs associated with inflation? Also, provide a real-world example of hyperinflation that happened in the past.

5. Identifying costs of inflation Beth owns and operates a store in a country experiencing a high rate of inflation. In order to prevent the value of money in her cash register from falling too quickly, Beth sends an employee to the bank four times per day to make deposits in an interest-bearing account that protects the store's revenues from the effects of inflation. This is an example of the of inflation.

A generalization of the fisher effect that can be applied to other variables is the relationship between real price growth and nominal price growth if we know the inflation rate. We can express this relationship T, where g is the growth rate (real or nominal) and t is inflation rate. Use this as greal information for problems 10-12. gnomial - 10. Assume that data shows the nominal price of a new Nissan Maxima was $12,000 in 1992 and $15,000 in 2002, but you also found a reliable source that claimed real price growth for Maximas this claim about real price growth A) 16.5% B) 5% C) 10% D) 8.5% E) Not enough information to determine was closer to 8.5%. For experienced from 1992 to 2002? to be true, how much inflation was 11. Assume that the inflation rate is the level you found in 10. If the real price growth for a Mercedes- AMG was 10%, and the nominal price in 1992 was 2002? $42,000; what is the nominal price of the Mercedes in A) $50,000 B) $53,130 C) $56,750 D) $60,070 E) $77,000 12.…