The anticipated inflation rate is 5 percent. In order for purchasing power to remain constant, the money wage rate must rise by
A) 7 percent.
B) 5 percent.
C) 2 percent.
D) 12 percent.

Name: The anticipated inflation rate is 5 percent. In order for purchasing power to remain constant, the money wage rate must rise by A) 7 percent. B) 5 percent. C) 2 percent. D) 12 percent.
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Question

Quizplus · Accepted Answer

To maintain constant purchasing power, the money wage rate must rise by the same rate as inflation, which is 5 percent.

The Anticipated Inflation Rate Is 5 Percent