It has been argued that inflation and unemployment are both good and bad. Explain. Are government efforts to control inflation and brings unemployment to Zero well advised? Explain.
It has been argued that inflation and
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A rise in the price of goods and services that households purchase is referred to as inflation. It is calculated as the rate at which the prices change. Normally, prices increase with time, however deflation can occur when prices decrease. The Consumer Price Index (CPI), which calculates the percentage change in the cost of a variety of services and goods that families typically use, is the most well-known measure of inflation. Annual inflation in a healthy economy normally ranges between two percentage points, which economists view as a sign of pricing stability. When inflation is within acceptable limits, it may also have a good impact. For example, it might encourage spending when the economy is slowing down and needs a boost, which will increase demand and productivity. On the other hand, when inflation starts to surpass wage growth, it may be an indication that the economy is in trouble.
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