Workers and Firms Both Expect That Prices Will Be 4

Multiple Choice

Workers and firms both expect that prices will be 4% higher next year than they are this year. As a result:

A) workers will be willing to take lower wages next year.
B) the purchasing power of wages will rise if wages increase by 4%.
C) the short-run aggregate supply curve will shift to the left as wages increase.
D) aggregate demand will increase by 4%.