How do wages equal prices and become transformed over time into inflation?
Homework Answers
Wages equals prices as, wage decides the demand of product and demand decides both the supply and price of the product.
For eg, if people's income increases they start consuming more as the demand for the product exceeds it's supply its price goes up and vice versa.
When wages increases the demand for the products exceeds the supply which leads to higher prices of everything. This general rise in the price of goods and services over a period of time becomes inflation.
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