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

Question

Quizplus · Accepted Answer

During a cost-push inflation spiral, the money wage rate increases as firms increase their costs of production, which causes an increase in the prices of goods and services. The quantity of money also increases as the central bank may print more money to try to combat the inflation.

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