The existence of inflation does which of the following?
A)facilitates the downward adjustment of real wages
B)reduces shoe-leather costs
C)reduces tax distortions
D)reduces the costs associated with money illusion

Question

Quizplus · Accepted Answer

Inflation can facilitate the downward adjustment of real wages because nominal wages can remain the same while the cost of goods and services increases, effectively reducing the purchasing power of wages. This can make it easier for firms to adjust wages downward without facing employee pushback.

The Existence of Inflation Does Which of the Following