Wages Are Often Tied to Expected Rates of Inflation; Thus,one

question 156

Multiple Choice

Wages are often tied to expected rates of inflation; thus,one reason why inflation is important is that

• A) when wages rise faster than inflation,companies lose money.
• B) when wages rise slower than inflation,workers suffer but corporate profits increase.
• C) inflation creates uncertainty about costs and prices,which affects both employees and employers.
• D) all inflation will eventually lead to hyperinflation,political instability,and war.
• E) menu costs mean restaurants have to print new menus,which is costly and unpleasant.

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