Inflation may occur if?

A. rate of productivity is higher than the wage rate
B. prices fluctuate during a particular season of the year
C. wage increase is granted without an increase in productivity
D. the government embarks on restrictive monetary policies

Correct Answer:

Option C = wage increase is granted without an increase in productivity

Explanation

If salaries and wages are increased without a corresponding increase in production, it will lead to inflation. This is so because they will be excess money chasing few the goods that are available in the market.