Suppose workers and employers agree to a three-year wage contract under the expectation of 3% inflation, but inflation turns out to be 1%. In this case, ________ lost purchasing power, and ________ gained purchasing power.
A. employers; workers
B. workers; employers
C. employers; no one
D. no one; employers

Respuesta :

Answer:

The correct answer is A. employers; workers.

Explanation:

The purchasing power is determined by the goods and services that can be purchased with a specific sum of money, given the prices of these goods and services. Thus, the greater the amount of goods and services that can be acquired with a certain sum of money, the greater the purchasing power of that currency. Therefore, the measurement of purchasing power is directly related to the consumer price index and can be used to compare the wealth of an average individual for a period prior to the present or in different countries at the same time.

In this case, employers lose because there was a 3% increase per year, while average prices increased by 1%, so the employer's purchasing power declined. At the same time, workers saw their purchasing power increase as their nominal income increased more than average prices