Answer: True
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Step-by-step explanation:
Utility is another way of saying happiness more or less. Marginal utility is getting that extra bit of satisfaction from buying/consuming one additional item. Saying the marginal utility is diminishing but not negative, means we have an increasing utility curve that has its rate of increase slow down. An example would be a log curve.
Inflation can be thought of as an expense. For example, if it costs $1 to get a loaf of bread one year, and then next year that cost jumps to $1.50 for that same loaf of bread, then the worker has effectively lost 50 cents on their paycheck. Zero inflation means there isn't any such expense. So in a way, this is like getting a raise.
Being paid more due to higher labor costs means that the worker gets even more money on top of the bonus money saved from zero inflation. These two aspects would provide a lot of incentive for the person to work more hours. Of course, there would be a point in which the marginal utility is far too small. In other words, the amount of additional money earned isn't worth the additional time spent working. This is likely when the worker would take time off, seek out a raise, or find some other job.