Suppose There Is a 3 Percent Increase in the Nominal

question 107

Multiple Choice

Suppose there is a 3 percent increase in the nominal wages of workers in an economy.The annual rate of inflation in the economy is about 6 percent.Which of the following is true in this case?

• A)Real wages would fall by about 3 percent.
• B)Real wages would increase by about 20 percent.
• C)Real wages would fall by about 25 percent.
• D)Real wages would increase by about 50 percent.
• E)Real wages would increase by about 10 percent.

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Definitions:

Unilateral Price Increase

A decision made by one party, usually the seller, to raise prices without the agreement or negotiation with the buyer.

Crunch

A critical situation or period characterized by a shortage or pressured demand for certain resources, often leading to difficult decision-making.

Buyer-supplier Satisfaction Matrix

A conceptual framework that assesses the satisfaction levels of both buyers and suppliers in a business relationship, used to optimize partnership strategies.

Buyer-supplier Relationships

The ongoing interactions and engagements between businesses purchasing goods or services and their vendors or suppliers.