What Will Tend to Happen to Wages If Workers and Employers

question 66

Multiple Choice

What will tend to happen to wages if workers and employers foresee inflation?

• A)Both parties will seek to reduce nominal wages, and therefore keep real wages the same.
• B)Nominal wages will remain constant, but real wages will increase to avoid the effects of inflation.
• C)Inflation erodes purchasing power of workers, and real wages are unchanged.
• D)Nominal wages will increase by an amount that keeps real wages constant.

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Definitions:

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Reference Group

One or more persons whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviors.

Indirect Influence

The subtle, non-direct impact that an entity or action may have on people's decisions, behaviors, or outcomes without explicit instruction or direct intervention.

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