Employees at the University Have Negotiated a 5 Percent Increase

question 205

Multiple Choice

Employees at the university have negotiated a 5 percent increase in wages for the next year,based on their inflation expectations.If inflation is actually 6 percent over the next year,which of the following will occur?

• A)Unemployment of university employees will rise.
• B)Real wages for university employees will fall.
• C)Inflation will be 5 percent the following year.
• D)The increase in inflation is expected.

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Definitions:

Tax Burden

Refers to the economic impact of taxes on an individual, corporation, or market, often measured as a percentage of income or GDP.

Price Elastic

A measure of the responsiveness of the quantity demanded or supplied of a good to a change in its price.

Per-Unit Tax

A tax that is charged on each unit of a good or service that is sold, often leading to a shift in supply or demand curves.

Buyers

Buyers are individuals or entities that purchase goods or services in the market.