ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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higher prices and increased economic growth
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higher prices and decreased structural unemployment
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higher prices and increased cyclical unemployment
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higher price s and full employment
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Detailed explanation-1: -Cost-push inflation upends the correlation between inflation and unemployment from negative to positive. The impact of productive potential is uncertain. Higher wages may cut employment more than output, raising productivity while leaving per capita GDP lower.
Detailed explanation-2: -Inflation has historically had an inverse relationship with unemployment. This means that when inflation rises, unemployment drops. Higher unemployment, on the other hand, equates to lower inflation.
Detailed explanation-3: -Cost-push inflation occurs when supply costs rise or supply levels fall. Either will drive up prices-as long as demand remains the same. Shortages or cost increases in labor, raw materials, and capital goods create cost-push inflation. These components of supply are also part of the four factors of production.
Detailed explanation-4: -Stagflation is an economic situation where the economy experiences the combination of inflation and stagnation. In this kind of situation the economy experiences unemployment with rise in the general price level.