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Andrew's Union Has Signed a New Wage Contract for the Coming

Question 117

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Andrew's union has signed a new wage contract for the coming year.It promises to increase Andrew's wages in the next year so that he can keep on consuming the same bundle of goods when the prices go up.Should Andrew anticipate being happier this year (before prices rise)or next year (after prices rise)? Use a graph to demonstrate how you can tell this.Be clear!

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If prices all rise by the same percentag...

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