Question

The effect is A. more likely if inflation is unanticipated because workers would not seek higher nominal wages. B. more likely if inflation is unanticipated because workers would seek higher nominal wages. C. less likely if inflation is unanticipated because workers would not seek higher nominal wages. D. less likely if inflation is unanticipated because workers would seek higher nominal wages.

Answer 1

Answer: A. more likely if inflation is unanticipated because workers would not seek higher nominal wages.

Step-by-step explanation:

An Unanticipated Spurt in Inflation could lead to rapid Economic growth and this effect is more likely if it was unanticipated because workers would not seek higher nominal wages.

This is because if the workers do not expect prices to rise and hence do not negotiate better wages, the cost of Production for producers will remain the same even though profitability has increased due to the higher prices.

The producers will therefore produce more goods to take advantage of the situation which will further aid Economic growth.

Answer 2

more likely if inflation is unanticipated because workers would not seek higher nominal wages.

Step-by-step explanation:

Here is the full question:

The effect of the sudden unanticipated spurt of inflation:

A. less likely if inflation is unanticipated because workers would not seek higher nominal wages.

B. less likely if inflation is unanticipated because workers would seek higher nominal wages.

C. more likely if inflation is unanticipated because workers would seek higher nominal wages.

D. more likely if inflation is unanticipated because workers would not seek higher nominal wages.

Inflation is a presistent rise in general price level.

Workers compensate for expected inflation by asking for an increase in nominal wages.

Nominal wages = real wages + inflation

If there's an unanticipated rise in inflation, workers would be at a disadvantage because their wages would most likely not reflect this unexpected rise in inflation.

I hope my answer helps you