Predictions for nominal wage increases and productivity grow
Macroeconomics
1. Given the following predictions for nominal wage increases and productivity growth, state your forecast for inflation (assume this is all the information available to make the forecast).
a. Nominal wages will increase 10%. Productivity will rise 6%.3
b. Nominal wages will increase 3%. Productivity will increase 3%.
c. Nominal wages will increase 4%. Productivity will increase 5%.
d. Nominal wages will increase 2%. Productivity will fall 1%.
2. State the equation of exchange. What three assumptions convert this equation into the quantity theory of money?
