Question

99 pts Which of the following statements refers to the wage-price spiral process? The salary of a worker fluctuates with the amount of sales he or she accomplishes per month. An employee loses his or her job, finds a position at another company, and is underemployed. Employees only receive a raise when their purchasing power has been eroded by inflation. A worker receives a raise, which increases costs for the employer.

Answer 1

Hi!

The correct answer would be:

A worker receives a raise, which increases costs for the employer.

The wage-price spiral process whereby a rise in wages causes an increase in prices, which in turn further increases the wages.

When a worker receives a raise, it causes the cost for the employer to increase. To balance this out, and to ensure profit, the employer will in turn charge more for the goods and services (meaning higher prices).

Hope this helps!