A worker would be hurt least by inflation when the
A)worker anticipates inflation and increases savings at the bank
B)worker is protected by a cost-of-living adjustment clause in an employment contract
C)the price level increases but at a decreasing rate
D)worker is protected by fixed annual increases in wages and benefits it an employment contract
E)government increases the level of social security retirement benefits to correct for the effects of unanticipated inflation

Question

Quizplus · Accepted Answer

A worker is hurt by inflation because as the cost of living increases, their income purchasing power decreases. However, if the worker is protected by a cost-of-living adjustment clause in their employment contract, their wages will automatically adjust to match inflation, minimizing the negative effects on their purchasing power. Therefore, option B is the best choice. A could also be a good choice if the worker anticipates inflation and takes proactive steps to increase their savings. The other options do not offer as much protection for the worker.

A Worker Would Be Hurt Least by Inflation When the