Question

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is:

Answer 1

Answer:

The correct answer is Temporarily low and so supply a smaller quantity of labor.

Explanation:

The inflation index is a variable that takes little to be identified by people. Although the price of products may have volatile movements, a decrease in the first place will lead to "Normal" behavior, which is expected to increase in the future.

In terms of work, it influences negatively because employees will feel little commitment and will be discouraged to see a decrease in their income.