Final answer:
When inflation increases faster than the minimum wage, the purchasing power of the minimum wage decreases.
Step-by-step explanation:
When inflation increases faster than the minimum wage, the purchasing power of the minimum wage decreases.
This means that even though the minimum wage might be increasing in nominal terms, it is not keeping up with the rising prices of goods and services.
As a result, individuals earning the minimum wage will find it increasingly difficult to afford the same level of goods and services they could purchase before.
Learn more about the impact of inflation on the purchasing power of the minimum wage