Alabor union wants the union members real wages to go up by

Alabor union wants the union members\' real wages to go up by 4.5% for the coming year. How much of an increase in wages should he union ask for, gen that inflation rate is expected to be 3.9% for the coming year? B. 15.0% ° C. -0.6% D. 4.5% Click to select your answer

Solution

Increase in real wage = increase in wage - expected inflation rate.

Here, increase in real wage is 4.5% and expected inflation rate is 3.9%, so the wage must increase by (4.5% + 3.9%) = 8.4%.

So, the wage must increase by:

A. 8.4%.