Explain about price inflation, Macroeconomics

Q. Explain about Price Inflation?

The major reason for allowing for non-constant wages in the model is that we then can allow for persistent deflation/inflation. With constant wages, we can't have persistent inflation as real wages would go to zero.

Neutral inflation is stated as a situation where wage inflation is equal to inflation (in prices). With neutral inflation, real wages are constant. Keynesian model doesn't require neutral inflation and real wages may vary over time. Though we can't have an inflation that is always greater than or always smaller than wage inflation as real wages again would go to zero or infinity (remember, growth has been removed so we expect no upward trend in real wages). Though a few adjustments should be made in the models when we have inflation.

Posted Date: 8/16/2013 2:34:53 AM | Location : United States







Related Discussions:- Explain about price inflation, Assignment Help, Ask Question on Explain about price inflation, Get Answer, Expert's Help, Explain about price inflation Discussions

Write discussion on Explain about price inflation
Your posts are moderated
Related Questions
Q. Monetary base and the supply of money? It isn't possible for central bank to print and distribute money -which would increase their debt without increasing their assets. Rat

with help of is-lm technique explain the process of integration of money market and goods market by way of keynesian approach

In the keynesian cross model, assume the consuption function is given by C=200=.75(Y-T) and planned investment=100, government purchases and taxes are each of them 100. a) Draw a g

Please answer the question below relating it to BUSINESS in today's world. What are the major tenents of the ethical theory of Utilitarianism, and how would this theory be appli

The Stop decay company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decay fighter, redu

Assume that an economy's GDP Y=5000. Also assume that the government runs a deficit where tax revenue T=1000 and government expendituresG= 1500. The consumption function is represe

# ???? .. difference between gdp at market price and nnp at factor cost

Explain how inflation unemployment trade off is not feasible under adaptive expectations?

The market for quits is initially competitive and the market demand is: P=400-0.4QD. The Combined marginal costs of the firms in the quit industry are: MC=50+0.6Q. a. Draw the

what are the advantages and disadvantages of a national income and green GDP? national income figures are often used to compare living standards across countries and through time.