Which of the following is true of a higher price level?
A) The higher the price level, any given money wage purchases less, so the wage is less attractive to workers.
B) The higher the price level, any given money wage purchases more, so the wage is more attractive to workers.
C) The higher the price level, any given money wage purchases more, so the wage is less attractive to workers.
D) The higher the price level, any given money wage purchases less, so the wage is more attractive to workers.
E) There is no relationship between the price level and money wages.

Question

Quizplus · Accepted Answer

As the price level increases, the purchasing power of any given money wage decreases. This means that workers will need higher wages to maintain their standard of living, making the existing wage less attractive. Therefore, a higher price level makes any given money wage less attractive to workers.

Which of the Following Is True of a Higher Price