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If Workers and Firms Expect That Inflation Will Be 3

Question 80

Multiple Choice

If workers and firms expect that inflation will be 3 percent next year, and real wages are not changing over time, by how much will nominal wages increase?


A) 3 percent
B) more than 3 percent
C) less than 3 percent
D) the real wage rate divided by the expected inflation rate
E) depends on actual inflation for next year

Correct Answer:

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