The inflation rate that is used to set the money wage rate and other money prices is the
A) natural inflation rate.
B) actual inflation rate.
C) expected inflation rate.
D) cost of living inflation rate.
E) wage inflation rate.

Question

Quizplus · Accepted Answer

The expected inflation rate is the one that is used to set the money wage rate and other money prices, as it reflects the anticipated increase in the general price level over a given period. This expected inflation rate is based on economic indicators, such as past inflation rates, monetary policy, and other factors that can affect the economy. The other choices are not relevant or do not accurately reflect the role of inflation expectations in setting money prices.

The Inflation Rate That Is Used to Set the Money