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JAMB Economics 1983 Question 16

Question 16

Money and Inflation

In an inflationary period which of the following statements is NOT true?

  1. A.Wages rise simultaneously with prices
  2. B.The purchasing power of money diminishes
  3. C.More money runs after a limited quantity of goods
  4. D.Money supply increases
  5. E.Aggregate real demand exceeds aggregate real supply.
Show the answer and explanation

Answer: A (Wages rise simultaneously with prices)

Explanation

In inflation wages usually lag behind prices, which is why wage earners lose; the other statements describe inflation correctly.