Lets assume that in Nicaragua inflation increased from an an

Let\'s assume that in Nicaragua inflation increased from an annual rate of 21 percent in 2000 to 20,000 percent in 2011. Disregarding the many other challenges that face the businesses of Nicaragua, and considering only the effects of this unexpected inflation, which of the following is most harmed by the inflation? s with wages determined by long-term contracts Businesses who had contracted to sell their services to others at fixed prices Businesses with large debts Businesses with large inventories

Solution

4) According to neoclassical, economic growth shifts the potential GDP and shift the vertical AS curve to the right. because under classical model there is full employment.Thus ans is A

3)ans is D. When AS supply curve is vertical, an incease in aggregate demand shifts the demand curve and this cause an increase in Price and output remains constant at potential output.

2)ans is A. Cola+2.2%

1)ans is B Contracted prices signed cannot be changed due to which prices of a commodity cannot be inflated and thus company loss their revenue.