The term that describes the economic status when wages are falling while prices are rising is:
C. Stagflation
Explanation:
1. Stagflation is a situation in the economy where there is a combination of stagnant economic growth, high unemployment, and high inflation.
2. In stagflation, wages tend to decrease or remain stagnant, making it difficult for people to afford goods and services as prices rise.
3. This economic condition poses challenges for policymakers as the usual tools to combat inflation or unemployment may not work effectively in a stagflationary environment.
4. Unlike a recovery where the economy is growing, hyperinflation which is an extreme and rapid inflation, or a depression which is characterized by a severe and prolonged economic downturn, stagflation presents a unique set of challenges due to the combination of high inflation and low economic growth.
In conclusion, stagflation is the term used to describe the scenario where wages are falling while prices are rising in the economy.
