Concept:Inflation arises when demand grows faster than the supply of goods, usually because extra income is created without a matching rise in production.
Explanation:When wages are increased without an increase in productivity, workers receive more money to spend.
However, the quantity of goods and services available in the market does not increase.
This creates a situation of too much money chasing too few goods.
As a result, producers raise prices because demand exceeds supply, causing inflation.
If productivity grows faster than wages, supply increases and helps control prices.
Seasonal price changes simply reflect temporary fluctuations, not general inflation.
Restrictive monetary policies reduce money supply, so they are used to fight inflation, not cause it.
Answer:C. wage increase is granted without an increase in productivity