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 3%, so they agree on a 5% nominal wage increase. Now, suppose inflation turns out to be lower than expected, coming in at 2%. This would (benefit or harm) the union and (benefit, harm) Friendly Airlines because the real wage increase would now be?
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Suppose Friendly Airlines is considering signing a long-term contract with the union representing it...
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