Consider an economy where, at the current level of employment, the real wage required by workers to supply their effort exceeds the real wage that firms can offer while maintaining their desired profit markup. Assuming firms and workers have bargaining power, what is the most likely outcome of this conflict over the distribution of output?

In an economy where employment is above its equilibrium level, a conflict arises between workers' wage demands and firms' desired profits. Arrange the following events to show the correct causal chain that results in inflation.

Predicting Inflation from a Bargaining Gap

The Wage-Price Spiral Mechanism