If Employers and Employees Are Negotiating a Wage Rise and the Expected

Multiple Choice

If employers and employees are negotiating a wage rise and the expected rate of inflation is 7%, which of the following would you expect?

A) We need more information about the expectations of both employers and employees.
B) The increase in wage will be about 7%, as employees will negotiate a wage rise above that and employers a wage rate below that.
C) The increase in wage will be above 7%, as employees have more market power.
D) The increase in wage will be below 7% as employers always have more power in wage negotiations.