WAEC Economics 2020 Objective — Question 35
Question 35 of 50 from the West African Examinations Council (WAEC) Economics 2020 Objective paper, with the correct answer and a full explanation.
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Inflation may occur if
- A. a rate of productivity is higher than wage rate
- B. prices fluctuate during a particular season of the year
- C. wage increase is granted without increase in productionCorrect
- D. (see explanation)
Explanation
When wages increase without a corresponding increase in production/output, purchasing power rises while goods remain scarce, leading to inflation (too much money chasing few goods).
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