Wage Price Spiral Flashcards
1
Q
1.
A
Worker’s standard of living drops due to inflation
2
Q
2.
A
They negotiate a pay rise to be able to afford more goods and services
3
Q
3.
A
Firms raise prices to maintain profit margins. This causes inflation meaning workers standard of living drops
4
Q
4
A
Firms have to pay more for labour and so their total costs rises.
