During a cost-push inflation spiral, the money wage rate ________ and the quantity of money ________.
A) increases; increases
B) increases; does not change
C) does not change; increases
D) does not change; does not change

Question

Quizplus · Accepted Answer

During a cost-push inflation spiral, the money wage rate increases due to rising production costs, and the quantity of money also increases as the central bank may inject more money into the economy to counteract the inflationary pressures.

During a Cost-Push Inflation Spiral, the Money Wage Rate ________