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Economics for Today 9th Edition by Irvin Tucker
Edition 9ISBN: 978-1305507111Economics for Today 9th Edition by Irvin Tucker
Edition 9ISBN: 978-1305507111 Exercise 7
Which of the following correctly describes a wage-price spiral?
A) An increase in nominal wages causes inflation, and inflation causes workers to demand even higher wages in order to keep their real income constant. This cycle can repeat itself.
B) An increase in real wages due to growth in worker productivity causes inflation, which in turn increases worker productivity.
C) A decrease in prices causes workers to demand higher wages, which in turn puts additional downward pressure on prices.
D) None of the answers above are correct.
A) An increase in nominal wages causes inflation, and inflation causes workers to demand even higher wages in order to keep their real income constant. This cycle can repeat itself.
B) An increase in real wages due to growth in worker productivity causes inflation, which in turn increases worker productivity.
C) A decrease in prices causes workers to demand higher wages, which in turn puts additional downward pressure on prices.
D) None of the answers above are correct.
Explanation
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The wage-price spiral recommends that ri...
Economics for Today 9th Edition by Irvin Tucker
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