For purchasing power to stay the same, wages must

Question

Quizplus · Accepted Answer

Inflation means an increase in the general price level of goods and services over time. Therefore, if wages increase at the same rate as inflation, the purchasing power of individuals would remain the same. If wages increase more slowly than inflation, the purchasing power decreases, and if wages increase faster than inflation, the purchasing power increases. Therefore, to maintain the same purchasing power, wages must increase at the same rate as inflation.

For Purchasing Power to Stay the Same, Wages Must