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In the reading3#《The Economist》(2022-02-19 Leaders),the author talks about the influences between the wages and inflation.Inflation refers to a situation in which the economy’s overall price level is increasing. The professor believes that workers have the most to lose from a wage-price spiral and as prices rise, real wages are falling.

It is generally believed that workers are often cannypioneers in the wage price spiral, rather than victims. Rising wages have pushed up the cost of enterprises, thereby raising prices to protect profits.

However, in fact, high inflation often hurts workers, and price determines wages. Despite the general shortage of labor, inflation is still higher than wage growth. There are many different causes of high inflation. For example, in Europe, high inflation is mostly counted as expensive energy. However, in America, it is the consequence of a tsunami of spending, the result of stimulus cheques and low-interest rates.

All in all, The correct response to an economy is not to interfere with wage- and price-setting.

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