Question

Assume that workers and businesses are sensitized to inflation and are quick to raise wages and prices in response to changes in the money supply. This implies that inflation is _____ and there are _____ adjustments of wages and prices of intermediate goods.
A) high; quick
B) low; quick
C) high; slow
D) low; slow

Answer 1

Answer:

A) high; quick

Explanation:

The information in the sentence above provides that the businesses and that the workers are sensitive to the change in any kind of money supply or inflation.

This means both very quickly respond to anything like that and will change accordingly.

Therefore, the inflation rate when is high, then the companies and workers are really quick to create any policy.