Asked by Wajahat Jabbar on May 17, 2024
Verified
The higher the anticipated inflation rate,_____.
A) the more workers will ask for in wages and the more firms will agree to pay
B) the more workers will ask for in wages and the less firms will agree to pay
C) the less workers will ask for in wages and the less firms will agree to pay
D) the higher the real wage increases offered by firms
E) the higher the real wage increases asked for by workers
Anticipated Inflation Rate
The inflation rate that individuals and businesses expect to prevail in the future, influencing their economic decisions.
Real Wage Increases
Adjustments in wages that are above the rate of inflation, resulting in an increase in purchasing power for the wage earner.
- Discern the differential effects that inflation exerts on multiple economic actors, including borrowers, lenders, and workers.
Verified Answer
ML
Murphy LedbetterMay 20, 2024
Final Answer :
A
Explanation :
When inflation is anticipated to be high, workers tend to ask for higher wages to maintain their purchasing power, and firms, understanding the inflationary context, are more likely to agree to these increases to retain their workforce and maintain productivity.
Learning Objectives
- Discern the differential effects that inflation exerts on multiple economic actors, including borrowers, lenders, and workers.