Suppose a Union and a Firm Agree to Increase the Wage

Multiple Choice

Suppose a union and a firm agree to increase the wage rate by the same percentage as the increase in the Consumer Price Index.If the CPI increases by 5 percent, then the real income of workers will

A) decrease by 5 percent, accounting for bias in the calculation of the CPI.
B) increase by less than 5 percent, accounting for bias in the calculation of the CPI.
C) increase by more than 5 percent, accounting for bias in the calculation of the CPI.
D) increase by 5 percent.
E) remain unchanged, accounting for bias in the calculation of the CPI.