For this question,assume that expectations of P and A are correct.Based on price setting behavior,the real wage will be equal to which of the following?
A)A / (1 + m)
B)AP / (1 + m)
C)APF(u,z)
D)P(1 + m)
E) none of the above

Question

Quizplus · Accepted Answer

According to the basic wage-setting equation, real wage (w/p) = A/(1+m). As we are given that expectations of P and A are correct, we can use this formula to calculate the real wage. Therefore, option A is the correct answer.

For This Question,assume That Expectations of P and a Are