Answered: Read the following extract and answer…

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: The Short-run Trade-off Between Inflation And Unemployment

Section: Chapter Questions

Problem 5CQQ

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Read the following extract and answer questions 1. and 2.

Pay rises offered despite Bank of England plea for restraint over inflation
Employers are set to increase wages at their fastest pace in almost a decade this year despite a plea for pay restraint from the governor of the Bank of England.
Some 46 per cent of companies struggling to keep hold of workers have already raised the pay of incumbent staff, according to research, and 40 per cent are planning to do so in future.

1. Which of the following macroeconomic objectives is being pursued by the Bank of England?
a) Price stability
b) Full employment
c) Economic growth
d) Wage rate stability

2. As companies in England increase wages, the greatest impact on economic growth will be on which of the following sources of growth?
a) Labour supply
b) Human capital
c) Productivity
d) Capital stock

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