Ongoing inflation does not automatically reducemost people’s incomes becausea. the tax code is fully indexed for inflation.b. people respond to inflation by holding less money.c. wage inflation goes together with price inflation.d. higher inflation lowers real interest rates.

Ongoing inflation does not automatically reducemost people’s incomes becausea. the tax code is fully indexed for inflation.b. people respond to inflation by holding less money.c. wage inflation goes together with price inflation.d. higher inflation lowers real interest rates.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Unemployment And Inflation

Section: Chapter Questions

Problem 4.10P

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Concept explainers

Unemployment and Cost of Unemployment

Unemployment is the state of being unemployed, even when an individual is actively seeking work opportunities. The unemployment rate refers to the percentage of the workforce that is currently unemployed.

Question

Ongoing inflation does not automatically reduce
most people’s incomes because
a. the tax code is fully indexed for inflation.
b. people respond to inflation by holding less money.
c. wage inflation goes together with price inflation.
d. higher inflation lowers real interest rates.

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