[Solved] If the Long-Run Aggregate Supply Curve Is Vertical

Gretchen expects the price level to rise from 104 this year to 108 next year, and she is able to incorporate these expectations into her wage contract.If the price level rises to 106 next year instead of 108, which of the following will occur? A)Gretchen's real wage will be unchanged. B)Gretchen's real wage will fall. C)Gretchen's real wage will rise. D)Gretchen's real wage may rise or fall, depending on the unemployment rate. E)Gretchen is much less likely to become unemployed.

Matt's real wage in 2017 is $26.80.If the price level is 104, what is Matt's nominal wage? A)$30.80 B)$27.87 C)$26.80 D)$25.77

If workers and firms expect that inflation will be 3 percent next year, and real wages are not changing over time, by how much will nominal wages increase? A)3 percent B)more than 3 percent C)less than 3 percent D)the real wage rate divided by the expected inflation rate E)depends on actual inflation for next year

If actual inflation is less than expected inflation, actual real wages will be ________ expected real wages and unemployment will ________. A)greater than; rise B)greater than; fall C)less than; rise D)less than; fall E)equal to; remain constant

The key to understanding the short-run trade-off behind the Phillips curve is that an increase in inflation will decrease unemployment if the inflation is ________ by both workers and firms. A)unexpected B)expected C)perfectly predicted D)ignored E)undetected

The price level in the economy between 2017 and 2018 rose from 130 to 135.Between 2018 and 2019, the price level rose from 135 to 140.19.How does the short-run Phillips curve predict the unemployment rate will change as a result? A)The unemployment rate will decrease since inflation decreased. B)The unemployment rate will decrease since inflation increased. C)The unemployment rate will increase since inflation increased. D)The unemployment rate would not change since there is no change in the rate of inflation. E)The unemployment rate would increase since inflation decreased.

A higher inflation rate can lead to lower unemployment if ________ mistakenly expect the inflation rate to be lower than it turns out to be. A)workers, but not employers B)employers, but not workers C)both workers and employers D)neither workers nor employers E)government, but not banks

In 2017 the small country of Notrealia had a price level of 149.35. In 2016 the price level was 145. If the average Notrealian earns a wage of $29 an hour in 2017. What is their real wage? A)$25.04 B)$29.87 C)$43.31 D)$20.00 E)$28.13

The natural rate of unemployment is the rate that exists when the economy is producing at potential GDP.

Ceteris paribus, in the short run following a decrease in the rate of growth in Aggregate Demand, we would expect to see an increase in the rate of unemployment and a decrease in the rate of inflation.