A basic rule of thumb to predict inflation is inflation 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 approximated by the difference between nominal wage increases and productivity growth. If wages rise faster than productivity, it can lead to inflation.

A Basic Rule of Thumb to Predict Inflation Is Inflation