refer to the following graph, which shows the probability distribution of wage offers for Sally, who is currently unemployed and searching for a job:

-If Sally correctly anticipates an increase in the rate of inflation,then:
A)both the acceptance wage and the entire distribution will shift to the left,thereby leaving expected search duration unchanged
B)the acceptance wage will shift to the right,thereby reducing expected search duration
C)the entire distribution will shift to the right,but the acceptance wage will not,thereby reducing expected search duration
D)both the acceptance wage and the entire distribution will shift to the right,thereby leaving expected search duration unchanged

Question

refer to the following graph, which shows the probability distribution of wage offers for Sally, who is currently unemployed and searching for a job:

-If Sally correctly anticipates an increase in the rate of inflation,then:
A)both the acceptance wage and the entire distribution will shift to the left,thereby leaving expected search duration unchanged 
B)the acceptance wage will shift to the right,thereby reducing expected search duration 
C)the entire distribution will shift to the right,but the acceptance wage will not,thereby reducing expected search duration 
D)both the acceptance wage and the entire distribution will shift to the right,thereby leaving expected search duration unchanged

Quizplus · Accepted Answer

If Sally anticipates an increase in the rate of inflation, both the acceptance wage (the minimum wage she is willing to accept) and the entire distribution of wage offers she might receive will shift to the right. This is because inflation erodes the purchasing power of money, so higher wages are required to maintain the same standard of living. However, since both the acceptance wage and the distribution of wage offers shift right by the same amount, the expected search duration (the time it takes for Sally to find an acceptable job offer) remains unchanged.

Refer to the Following Graph, Which Shows the Probability Distribution