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Suppose workers and employers are expecting an annual inflation rate of three per cent and agree to a three-year wage contract. If inflation turns out

Suppose workers and employers are expecting an annual inflation rate of three per cent and agree to a three-year wage contract. If inflation turns out to be two per cent, the real income of workers will ______ and the real cost to employers will _____:

1)increase , decrease

2)decrease, decrease

3)increase , increase

4)decrease, increase

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