Inflationary Consequence of Low Unemployment
When unemployment falls below its equilibrium level, firms' human resources departments increase nominal wages to attract and retain employees. This raises the firms' costs, prompting their marketing departments to increase prices to protect the target profit margin. The resulting rise in both wages and prices reflects the conflicting claims on output between workers and owners, initiating an inflationary process.
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Introduction to Macroeconomics Course
Ch.4 Inflation and unemployment - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
CORE Econ
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Inflationary Consequence of Low Unemployment
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