A basic rule of thumb to predict inflation is that it equals:
A)real wage increases minus productivity growth.
B)productivity growth plus nominal wage increases.
C)productivity growth minus nominal wage increases.
D)nominal wage increases minus productivity growth.

Question

Quizplus · Accepted Answer

Inflation can be roughly predicted by the difference between nominal wage increases and productivity growth. When nominal wages increase faster than productivity, it typically leads to inflation, as the cost of labor per unit of output increases, potentially leading to higher prices for goods and services.

A Basic Rule of Thumb to Predict Inflation Is That