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Mechanism for Reducing Inflation via High Unemployment
To reduce a high rate of inflation, the Phillips curve model indicates that a negative bargaining gap must be created. This is achieved by increasing the unemployment rate above the structural, or inflation-stabilizing, rate. The resulting negative gap signifies a weak labor market, which puts downward pressure on wages and prices, causing the inflation rate to fall over time.
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Economics
Economy
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
Social Science
Empirical Science
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Mechanism for Reducing Inflation via High Unemployment
Using High Unemployment to Reduce Inflation After the 1970s Oil Shocks
Interpreting Inflationary Trends
An economy had an inflation rate of 4% last year. This year, due to a recession, the economy is experiencing a negative bargaining gap of -1.5%. Based on the principle that the current inflation rate is determined by last year's inflation plus the current bargaining gap, what is the expected inflation rate for the current year?
Over a three-year period, an economy's inflation rate has steadily increased. Based on the principle that the current inflation rate equals the previous period's inflation rate plus the bargaining gap, what can be inferred about the bargaining gap during these three years?
Maintaining Stable Inflation
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Movement Along the Phillips Curve to Reduce Inflation
Central Bank's Inflation Control Strategy
An economy is experiencing a persistently high rate of inflation. According to the economic model where inflation is influenced by the state of the labor market, which sequence of events correctly describes the process required to bring inflation down?
The Labor Market's Role in Disinflation
Evaluating the Social Costs of Disinflationary Policy