Problem
Suppose prices had been rising at 3 percent annually in recent years. A major union signs a three-year contract calling for increases in money wage rates of 6 percent annually. What will happen to the real wages of the union members if the price level is constant (unchanged) during the next three years? If other unions sign similar contracts, what will probably happen to the unemployment rate? Why? Answer the same questions under conditions in which the price level increases at an annual rate of 8 percent during the next three years.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.