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) worker is protected by ﬁxed annual increases in wages and beneﬁts in an employment contract.
D) government increases the level of Social Security retirement beneﬁts to correct for the effects of anticipated inﬂation.

Question

Quizplus · Accepted Answer

A worker would be hurt least by inflation when they are protected by a cost-of-living adjustment clause in an employment contract. This means that the worker's wages and benefits automatically increase to match the rate of inflation, so their purchasing power remains the same. Option A is not ideal as increasing savings at the bank does not necessarily protect against inflation as the value of money may decrease faster than the interest earned. Option C only protects against inflation if the fixed annual increases in wages and benefits outpace the rate of inflation. Option D only applies to Social Security retirement benefits and may not be sufficient to protect the worker's purchasing power.

A Worker Would Be Hurt Least by Inﬂation When the