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Business, 18.02.2021 23:40 1lowz1k

Suppose Friendly Airlines is considering signing a long-term contract with the union representing its pilots. Friendly Airlines and the union both agree that real wages should increase by 2%. Inflation is expected to be 5%, so they agree on a 7% nominal wage increase. Now, suppose inflation turns out to be higher than expected, coming in at 6%. This would the union and Friendly Airlines because the real wage increase would now be .

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