Buscar
Estás en modo de exploración. debe iniciar sesión para usar MEMORY

   Inicia sesión para empezar


Por supuesto:

Economics A Level (DONEEEEEEE)

» Iniciar este curso
(Practica preguntas similares gratis)
Pregunta:

Why can Inflation being Embedded affect the Philipps Curve?

Autor: eric_galvao



Respuesta:

-Let's say we begin at Point A, where Unemployment is at its Natural Rate. This is the NRU -Inflation is at 0% here, and Economic Agents will Expect Inflation to stay the same, as it Influences Workers Wage, and Consumers Expenditure -If AD Rises, and Unemployment goes Below the NRU, then Wage Demands will Increase and Inflation will therefore Rise - say 3% -Because Economic Agents think Inflation will stay at 3%, Economic Agents will use that to Influence their Decision-making (Wage Negotiation) -As Wage Demands become Greater, Firms will be Less Willing to take Workers so Unemployment will Rise back to the NRU. Despite Unemployment Returning back, the Inflation Rate of 3% is now Embedded in the economy. Higher AD only leads to Further Embodiments of Inflation in the Economy


0 / 5  (0 calificaciones)

1 answer(s) in total