Asked by Maren Williams on May 02, 2024
Verified
Some economists argue that since inflation
A) raises the real value of fixed nominal wages, a little inflation may make it easier for labor markets to adjust.
B) raises the real value of fixed nominal wages, a little inflation may make it harder for labor markets to adjust.
C) reduces the real value of fixed nominal wages, a little inflation may make it easier for labor markets to adjust.
D) reduces the real value of fixed nominal wages, a little inflation may make it harder for labor markets to adjust.
Nominal Wages
The wages paid to employees measured in current money and not adjusted for inflation, reflecting the face value of earnings.
Labor Markets
Economic markets in which labor services are bought and sold, including the supply of labor by households and the demand for labor by firms.
- Acquire knowledge about the acknowledged merits of mild inflation in economic structures, with a focus on labor markets.
Verified Answer
ZK
Zybrea KnightMay 07, 2024
Final Answer :
C
Explanation :
Inflation reduces the real value of fixed nominal wages, which can make it easier for labor markets to adjust because employers can effectively lower real wages without nominal wage cuts, facilitating adjustments in labor demand and supply.
Learning Objectives
- Acquire knowledge about the acknowledged merits of mild inflation in economic structures, with a focus on labor markets.