How Is Perception About the Future Inflation Rate Likely to Affect

question 64

Multiple Choice

How is perception about the future inflation rate likely to affect labour markets?  

• A) the higher the anticipated inflation rate, the more workers will ask for in wages, and the more firms will agree to pay to workers 
• B) the higher the anticipated inflation rate, the more workers will ask for in wages, and the less firms will agree to pay to workers 
• C) the higher the anticipated inflation rate, the less workers will ask for in wages, and the less firms will agree to pay to workers 
• D) the higher the anticipated inflation rate, the higher the real wage increases firms will offer to their workers

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Definitions:

Past Consideration

A concept in contract law that refers to an act or benefit given prior to the promise being made, which therefore does not constitute valid consideration for a contract.

Stock Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a stock at a predetermined price within a specific period.

Promissory Estoppel

A legal principle that prevents a party from backing out of a promise which led the other party to take action or abstain from it, based on the promise.

Illusory Promise

A statement that appears to be a promise but does not actually bind the party making it to any action or performance, rendering it unenforceable as a contract.