True or False Wages that have Cost-of-living adjustments (COLAs) are guaranteed to keep up with inflation.

Expert Solution

Correct option is: True

Cost-of-living adjustments (COLAs) involves increase in pay of employees in order to keep pace with inflation. It allows to keep purchasing power to equal to rising costs. COLA raises are based on consumer price index, that is the federal government's official measurement of inflation, so, COLA increases when prices of goods & services rises. It helps wage earners to maintain their standard of living. It is usually applied to wages, salaries & benefits.

Rahul Sunny answered 2 years ago

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