If your wages are indexed so that they automatically adjust for inflation, in a period of continued high inflation, the cost of the goods and services you buy ____ and your nominal income ____.
A)decreases, decreases
B)increases, increases
C)decreases, remains the same
D)increases, remains the same

Question

If your wages are indexed so that they automatically adjust for inflation, in a period of continued high inflation, the cost of the goods and services you buy ____ and your nominal income ____.
A)​decreases, decreases
B)​increases, increases
C)​decreases, remains the same
D)​increases, remains the same

Quizplus · Accepted Answer

In a period of continued high inflation, the cost of goods and services increases, and if wages are indexed to inflation, nominal income also increases to compensate for the higher prices.

If Your Wages Are Indexed So That They Automatically Adjust