Consider the following statements about inflation in an economy 1 It increases employment in the lon...........

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Consider the following statements about inflation in an economy

1.It increases employment in the long run.

2.It decreases the nominal face value of the wages.

Which of the statements given above is/are correct?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

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Explanation:

Neither 1 nor 2

Inflation typically does not increase employment in the long run. While it may have short-term effects on employment due to changes in demand and investment patterns, in the long run, its impact on employment depends on various factors such as monetary policy, productivity, and structural changes in the economy.

Inflation generally decreases the real value of wages, not the nominal face value. The nominal face value of wages remains the same, but inflation erodes the purchasing power of those wages over time.