Asked by ANGELITA BROOKS on May 08, 2024
Verified
A wage-price spiral is the result of
A) lower wages and higher prices.
B) higher wages and lower prices.
C) higher wages and higher prices.
D) lower wages and lower prices.
Wage-Price Spiral
A situation where rising wages increase disposable income, leading to higher demand for goods and services, which then leads to higher prices and further wage demands.
Higher Wages
Increased salaries or hourly rates paid to employees.
- Apprehend the notion and effects of inflation in addition to disinflation.
- Comprehend the connection between inflation rates and the economic welfare of diverse agents.
Verified Answer
LW
Lawana WoodardMay 13, 2024
Final Answer :
C
Explanation :
A wage-price spiral is a phenomenon where increased wages lead to increased prices, which in turn lead to demands for even higher wages. This continues in a cycle, with wages and prices increasing in tandem. Therefore, the correct answer is higher wages and higher prices (choice C).
Learning Objectives
- Apprehend the notion and effects of inflation in addition to disinflation.
- Comprehend the connection between inflation rates and the economic welfare of diverse agents.