Economics Inflation Questions
The impact of inflation on wages is that it erodes the purchasing power of workers' income. As the general price level rises, the cost of goods and services increases, leading to a decrease in the real value of wages. This means that even if workers receive nominal wage increases, their purchasing power may not necessarily improve. Inflation can also create uncertainty and wage-price spirals, where workers demand higher wages to keep up with rising prices, leading to further inflationary pressures.