Question

Suppose all wages were indexed to inflation. Would inflation still be considered a problem? Why or why not?

Answer 1

A situation of continous increase in price if considered as inflation. Merely high prices are not considered as inflation, rather rising prices are considered as inflation.
An inflationary situation implies increase in money supply in the economy, due to which agregate demand increases and as result price of commodity increases. Thus under inflation if wages are indexed for inflation also, the situation will be equally harmful because it affect the money supply and then the price level. If workers are given wages according to inflation, then due to high wages (as a result of high money supply) they will demand more and consequently due to lack of supply prices will rise and inflation will get moe accute.

Thus even if wage rate are indexed as per inflation, then also inflaton will be considered as a huge economic problem.
But if due to inflation workers are given less wage then inflation may get controlled because in that case consumers will be available with less money in hand and will demand less. This will reduce the price of commodities in market and automatically inflation will be under control and will not be considered as a problem.