If actual inflation is less than expected inflation, which of the following will be true?

Question

Quizplus · Accepted Answer

If actual inflation is less than expected inflation, then the nominal wages are likely to remain constant, whereas the real wages (i.e., nominal wages adjusted for inflation) increase. This is because the purchasing power of money increases due to the lower-than-expected inflation rate. Hence, consumers can buy more goods and services with the same nominal wage.

If Actual Inflation Is Less Than Expected Inflation, Which of the Following