When an employer is forced to increase wages at the same rate of inflation,the
A) worker is receiving a cost-of-living adjustment.
B) economy is experiencing stagflation.
C) economy is experiencing hyperinflation.
D) economy is experiencing disinflation.
E) effects of expansionary monetary policy are amplified.

Question

Quizplus · Accepted Answer

When an employer increases wages at the same rate of inflation, the worker is receiving a cost-of-living adjustment. This is done to maintain the purchasing power of the worker's wages in the face of inflation. Stagflation, hyperinflation, and disinflation refer to different types and levels of inflation or lack thereof, and are not directly relevant to this situation. The effects of expansionary monetary policy are not specifically mentioned and do not directly apply here.

When an Employer Is Forced to Increase Wages at the Same