Question

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Please select the best answer from the choices provided
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What is the possible consequence of the following scenario? Because of high unemployment rates in the country of
Lavernia, employers offer higher wages. To meet their higher payroll costs and maintain profits, they charge consumers mor
for goods and services.
a.
a prolonged period of deflation
b. demand-pull inflation
C.
a wage-price spiral of ever-increasing prices
d. increasing numbers of people living on a fixed income
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Answer 1

The possible consequence is a wage-price spiral of ever-increasing prices.

Step-by-step explanation:

The possible consequence of the scenario described is a wage-price spiral of ever-increasing prices. This is because employers in Lavernia, due to high unemployment rates, offer higher wages to attract workers. To cover their increased payroll costs, employers raise prices, resulting in a continuous cycle of increasing wages and prices.

Learn more about the consequence of high unemployment rates on wages and prices