Wage-Price Spiral Concept
Which of the following best describes the concept of a wage-price spiral?
A
Rising wages increase production costs, prompting firms to raise prices, which then leads workers to demand even higher wages in a continuing cycle.
B
A wage-price spiral occurs when increased government spending drives up both wages and prices simultaneously, independent of labor market conditions.
C
It describes a scenario where higher wages boost aggregate demand, which in turn immediately forces firms to cut wages to maintain competitiveness.
D
The phenomenon where rising wages lead to cost reductions that eventually bring down prices is known as a wage-price spiral.
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