If inflation turns out to be higher than households and firms had previously expected, the actual real wage will end up being______.A. the inverse of the expected real wage.B. equal to the expected real wage.C. higher than the expected real wage.D. lower than the expected real wage.

When individuals and firms agree on salaries and wages for their workforce they assume a certain level of inflation. If the inflation result higher than expected then the nominal increase in the wages which include a lower inflation premium ends up with a real yield lower than the agents expected.

This will make subsequent years infloation premium higher to avoid the further losses in the real level of wages

If inflation turns out to be higher than households and firms had previously​ expected, the actual real wage will end up being______.A. the inverse of the expected real wage.B. equal to the expected real wage.C. higher than the expected real wage.D. lower than the expected real wage.

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If inflation turns out to be higher than households and firms had previously expected, the actual real wage will end up being______.A. the inverse of the expected real wage.B. equal to the expected real wage.C. higher than the expected real wage.D. lower than the expected real wage.