Workers in country A have wage contracts for cost-of-living adjustments (COLAs) , which adjust wages to offset the effect of inflation, and workers in country B do not. When the central banks of countries A and B increase the money supply:
A) prices in country A increase faster than prices in country B.
B) prices in country B increase faster than prices in country A.
C) prices in countries A and B will change at the same rate.
D) COLAs have no effect on the speed of price changes.
Correct Answer:
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