Recently a Labour Union Argued That the Standard of Living

question 69

Multiple Choice

Recently a labour union argued that the standard of living of its members was falling.A critic of the union argued that this could not possibly be true because the union had been acquiring significant increases in the nominal incomes of its members through collective bargaining.Is the critic correct?

• A)Yes, because when you have a large nominal income your standard of living automatically increases.
• B)No, because real income may fall if price increases are more proportionately than the increase in nominal income.
• C)No, because real income may fall if price increases are less proportionately than the increases in nominal income.
• D)Yes, because real income may fall if price increases are less proportionately than the increases in nominal income.

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Definitions:

Investment Center

An investment center is a business unit within an organization that is responsible for its own revenue, expenses, and investments, and its performance is assessed based on return on investment.

Performance Report

A document that compares actual operational or financial results to planned or budgeted results.

Cost Center

A department or unit within an organization that does not directly add to profit but still incurs costs.

Departmental Contribution To Overhead

The amount of money that each department contributes towards covering the company's indirect costs or overheads.