Compensation is usually negotiated in terms of a nominal wage because
A)employers want to pay low real wages
B)workers are concerned only about the nominal wage
C)firms are concerned only about the nominal wage
D)wage agreements are based on expected price levels
E)implicit contracts between workers and employers seldom last longer than three months

Question

Quizplus · Accepted Answer

Nominal wage agreements are based on expected price levels because both workers and employers want to ensure that the real value of wages does not decrease due to inflation. Negotiating on the basis of nominal wages helps to avoid disputes over real wages in the future.

Compensation Is Usually Negotiated in Terms of a Nominal Wage