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Question
Which one of the following wage-productivity combinations will place the greatest upward pressure on the price level?
a. Nominal wage increase of 5%, productivity increase of 5%
b. Nominal wage increase of 4%, productivity increase of 2%
c. Nominal wage decrease of 5%, productivity increase of 5%
d. Nominal wage increase of 2%, productivity increase of 4%
Answer
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Related questions
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d. firms have an incentive to contract with workers to pay them the going market wage
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a. firms mistake lower real wage rates for lower money wage rates and therefore increase employment beyond the profit-maximizing level
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