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Simple English definitions for legal terms
wage-and-price freeze
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A quick definition of wage-and-price freeze:
A wage-and-price freeze is when the government says that companies can't raise the prices of things they sell or the wages they pay their workers. It's like pressing pause on how much things cost and how much people get paid. This is done to try to control inflation, which is when prices go up too fast and things become too expensive for people to buy.
A more thorough explanation:
A wage-and-price freeze is a period when the government forbids the increase of wages and prices. This means that companies cannot raise the prices of their products or services, and employees cannot receive a raise in their wages. The government imposes this freeze to control inflation, which is the increase in the prices of goods and services over time.
- During the 1970s, the United States government implemented a wage-and-price freeze to combat inflation caused by the Vietnam War.
- In 2020, the Venezuelan government imposed a wage-and-price freeze to control hyperinflation in the country.
These examples illustrate how a wage-and-price freeze is used by governments to control inflation. By preventing companies from raising prices and employees from receiving raises, the government hopes to stabilize the economy and prevent prices from spiraling out of control.