If the prices of all goods and services double, and wages and salaries do likewise, how are individuals and the nation as a whole affected?
A)There is no effect on real output.
B)The inflation rate is doubled.
C)Real wages fall.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When prices of goods and services and wages and salaries double, the purchasing power remains the same, meaning there is no effect on the real output or real wages. The inflation rate might increase, but that's not equivalent to doubling the inflation rate directly.

If the Prices of All Goods and Services Double, and Wages