If workers and firms expect that inflation will be 5 percent next year,and real wages are not changing over time,by how much will nominal wages increase?

Question

Quizplus · Accepted Answer

Nominal wages will increase by the expected inflation rate of 5 percent, which is what workers and firms are anticipating. This is assuming that there are no unexpected changes in inflation or other factors affecting wages.

If Workers and Firms Expect That Inflation Will Be 5