Inflation may occur if
ECONOMICS
WAEC 2020
Inflation may occur if
- A. rate of productivity is higher than the wage rate
- B. prices fluctuate during a particular season of the year
- C. wage increase is granted without an increase in productivity
- D. the government embarks on restrictive monetary policies
Correct Answer: C. wage increase is granted without an increase in productivity
Explanation
If salaries and wages are increased without a corresponding increase in production, it will lead to inflation. This is so because they will be excess money chasing few the goods that are available in the market.
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