Multiple Choice
Assume contracts between workers and employers that call for an increase in the wage rate of 5 percent are based on an expected inflation rate of 3 percent. Should inflation actually be 6 percent,
Then
A) nominal wages fall by 5 percent.
B) real wages fall by 6 percent.
C) nominal wages fall by 1 percent.
D) real wages fall by 1 percent.
Correct Answer:
Verified
Correct Answer:
Verified
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