Mechanism of a Wage-Price Spiral

An economy experiences a sudden, sharp increase in the price of all imported raw materials, a critical input for most domestic industries. If policymakers do not intervene to stabilize the economy, which of the following combinations of economic outcomes is the most probable result?

Analyzing the Aftermath of a Financial Crisis

Match each potential economic outcome of an unstabilized shock with its correct description.

In an economy with no government or central bank intervention, a sudden, large-scale collapse in business investment is likely to result in a wage-price spiral.

Explaining Persistent Unemployment

An economy experiences a sudden, large increase in consumer spending that policymakers do not address. Arrange the following events to illustrate the logical progression of a resulting wage-price spiral.

Evaluating the Impact of an Unaddressed Agricultural Crisis

Evaluating the Severity of Economic Crises

When an economy experiences a sudden decrease in its ability to produce goods and services, and policymakers do not intervene, the resulting combination of rising prices and declining economic output is known as ________.