If Workers and Firms Agree on an Increase in Wages

question 35

Multiple Choice

If workers and firms agree on an increase in wages based on their expectations of inflation and inflation turns out to be more than they expected,

• A) The interest rate will fall
• B) Workers will gain at the expense of firms.
• C) Neither workers nor firms will gain because the increase in wages is fixed in the labour agreement.
• D) Firms will gain at the expense of workers.

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Definitions:

Desire

A strong feeling of wanting to possess or achieve something.

Arousal

A physiological and psychological state of being awake or reactive to stimuli.

Orgasm

A peak moment of sexual pleasure accompanied by physiological and psychological changes.

Vasocongestion

The increase of blood flow to specific parts of the body, often resulting in swelling and redness.