If a Private Wage Contract Is Agreed Upon with a Cost

question 59

Multiple Choice

If a private wage contract is agreed upon with a cost of living adjustment such that wage hikes are equal to increases in the CPI,

• A)the CPI bias means that workers benefit if the price level rises and the employer benefits if the price level falls.
• B)workers exactly keep pace with changes in the cost of living.
• C)workers benefit because the CPI increases more rapidly than does the cost of living.
• D)the employer benefits because wages will rise less than the change in actual prices.
• E)the CPI bias means that workers benefit if the price level falls and the employer benefits if the price level rises.

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Definitions:

Freeze-Out Acquisition

A strategy used in mergers and acquisitions where a majority shareholder forces out minority holders to take full control of the company.

Share Split

Traditionally, a corporation’s dividing existing shares into two or more shares, thereby increasing the number of authorized, issued, and outstanding shares and reducing their par value. In modern corporation law, treated like a share dividend. Also called stock split.

Total Fairness Test

A legal standard used to evaluate the overall fairness and equity of a corporate action or decision, especially in mergers and acquisitions.

Straight Voting

A form of voting for directors that ordinarily permits a shareholder to cast a number of votes equal to the number of shares he or she owns for as many nominees as there are directors to be elected. See also cumulative voting.