Suppose a Worker Signs a Contract Containing an 8 Percent

Multiple Choice

Suppose a worker signs a contract containing an 8 percent nominal wage increase with inflation expected to be 3 percent.Inflation turns out to be 6 percent,but the contract also contains 60 percent COLA protection.The worker's real wage under the contract

A) falls by 1.2 percent.
B) falls by 2.4 percent.
C) rises by 3.8 percent.
D) rises by 3.0 percent.
E) rises by 1.8 percent.