To avoid the negative effects of unexpected inflation,workers have an incentive to
A) lock in their current wages for years.
B) stay unemployed during years of inflation.
C) never negotiate wage contracts.
D) change jobs regularly.
E) expect a certain level of inflation and to negotiate their contracts accordingly.

Question

Quizplus · Accepted Answer

Expecting a certain level of inflation and negotiating their contracts accordingly is the best choice as it allows workers to account for the expected inflation in their wage contracts. This can help ensure that their wages keep up with the rising prices and avoid the negative effects of unexpected inflation. Locking in current wages or staying unemployed during years of inflation is not a feasible solution, while never negotiating wage contracts can lead to stagnant wages that do not keep up with inflation. Changing jobs regularly may not necessarily address the issue of inflation and can lead to instability in employment.

To Avoid the Negative Effects of Unexpected Inflation,workers Have an Incentive