In the new classical model,workers and firms try to keep their real wages and relative prices from falling when ________.
A)income falls
B)they expect inflation to rise
C)they expect inflation to fall
D)they expect aggregate demand to fall

Question

Quizplus · Accepted Answer

When workers and firms expect inflation to rise, they will try to keep their real wages and relative prices from falling by demanding higher nominal wages and prices.

In the New Classical Model,workers and Firms Try to Keep