Question

Recently a labor union argued that the standard of living of its members was falling. A critic of the union argued that this could not possibly be true because the union had been acquiring increases in the nominal incomes of its members through collective bargaining. Is the critic correct

Answer 1

Answer: The bargaining real income may fall if increases more proportionally than increases in nominal income

Explanation:

They are factors that affects prices in the market, and this prices influences the market in a way that the standard of living for individuals begin to fall. If the prices of products in the market increases and the staffs still earn their pay or a little increase in their pay the standard of living would fall. Most times what help staff or employees in sustaining an affordable lifestyle with their pay is how much things are sold in the market. If things are sold favourable with what they earn, they won't be a fall in standard of living.

Answer 2

Answer:

Depends, the critic may or may not be correct.

Explanation:

The standard of living is determined by how the real wage of the union members varies over time. The real wage change = nominal wage increase - inflation rate for the year.

If the inflation rte was higher than the nominal increase, then the real wage has decreased and the union members are right. But if the inflation rate was lower than the nominal increase, then the real wage increased and the critic was right.