If nominal wages rose 1.5% and productivity increased 3% in a given year,we should expect:

Question

Quizplus · Accepted Answer

When productivity increases faster than wages, unit labor costs decrease. This can result in downward pressure on prices as firms are able to produce goods and services more efficiently without having to raise prices to cover the costs. Therefore, the correct choice is D, which states a decrease in unit labor costs and downward pressure on prices.

If Nominal Wages Rose 1