Which of the following would allow a worker to be least hurt by inflation?
A) The worker anticipates inflation and increases his savings.
B) The worker has a cost-of-living adjustment clause in his employment contract.
C) The price level increases but at a decreasing rate.
D) The worker has fixed annual increases in wages and benefits in his employment contract.

Question

Which of the following would allow a worker to be least hurt by inflation?  
A) The worker anticipates inflation and increases his savings. 
B) The worker has a cost-of-living adjustment clause in his employment contract. 
C) The price level increases but at a decreasing rate. 
D) The worker has fixed annual increases in wages and benefits in his employment contract.

Quizplus · Accepted Answer

A cost-of-living adjustment clause in the employment contract ensures that the worker's wages and benefits increase along with inflation, thus avoiding the effects of inflation on the worker's purchasing power. Option A may partially help, but it does not provide protection against inflation's effects on the worker's earnings. Option C implies a reduction in the rate of inflation, which is favorable but still impacts the worker. Option D provides fixed annual wage increases, and such increases may not keep up with inflation, leading to a reduction in purchasing power for the worker.

Which of the Following Would Allow a Worker to Be