If Workers and Employers Agree to a Three-Year Wage Contract

question 52

Multiple Choice

If workers and employers agree to a three-year wage contract under the expectation of 3% inflation, and inflation turns out to be 5%, then:

• A)workers gain and employers gain.
• B)workers gain and employers lose.
• C)workers lose and employers gain.
• D)workers lose and employers lose.

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Definitions:

Principal

The original sum of money borrowed in a loan or the initial amount of investment, excluding any interest or dividends.

Issue Price

The price at which new shares, bonds, or other securities are offered to the public or institutional investors for the first time.

Future Value

The value of a current asset at a specified date in the future based on an assumed rate of growth over time.

Contract Rate

The agreed-upon price or interest rate outlined in a contract for services or loans.