If workers can see inflation coming, and if they receive compensation for it, then inflation does not erode real wages.

Question

Quizplus · Accepted Answer

If workers are aware of inflation and adjust their wage demands accordingly, then they can maintain the purchasing power of their income. In this case, their real wage would not be eroded by inflation. However, if workers are not able to negotiate higher wages to keep up with inflation, or if they are unaware of inflation, then their real wages would be eroded.

If Workers Can See Inflation Coming, and If They Receive