When employees demand higher wages as a result of price increases which were caused by higher wages being paid by companies, it is called
A) economic inflation.
B) the wage-price spiral.
C) out of kilter fiscal policies.
D) a recession.

Question

Quizplus · Accepted Answer

The wage-price spiral is a phenomenon where wage increases lead to price increases, which lead to further wage demands, causing a cycle of inflation. This occurs when companies increase wages to keep up with the rising cost of living, and then pass on those increased costs to consumers through higher prices for goods and services. As a result, employees demand higher wages to maintain their standard of living, and the cycle continues.

When Employees Demand Higher Wages as a Result of Price