The signing of long-term wage and price agreements and the relationship to inflation most likely raises the issue of
A) price confusion problems.
B) future price uncertainty.
C) money illusion.
D) consumer price index (CPI)heteroscedasticity.
E) deflationary tendencies.

Question

Quizplus · Accepted Answer

Long-term wage and price agreements can create future price uncertainty because they lock in prices over a prolonged period, and economic conditions can change, leading to the agreement's terms becoming outdated. This can cause inflationary pressures if prices rise, leading to the wages agreed upon becoming less valuable.

The Signing of Long-Term Wage and Price Agreements and the Relationship