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24 October, 15:44

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 more 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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  1. 24 October, 15:52
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    C. a wage-price spiral of ever increasing prices.
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