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Author Question: Discuss what factors could cause a real depreciation. What will be an ideal ... (Read 123 times)

pragya sharda

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on: Jun 30, 2018
Discuss what factors could cause a real depreciation.
 
  What will be an ideal response?

Question 2

Explain what is meant by the wage-price spiral.
 
  What will be an ideal response?


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fatboyy09

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Reply #1 on: Jun 30, 2018
Answer to Question 1

Decrease in E; increase in P; and decrease in P.

Answer to Question 2

The wage-price spiral refers to the effects of low unemployment on inflation. Specifically, when the unemployment rate falls, the nominal wage will rise. As W rises, firms' costs increase causing them to increase prices. As prices rise, workers will later ask for increases in the nominal wage. This increase in W again causes firms' costs and prices to rise and the process repeats itself.


pragya sharda

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Reply 2 on: Jun 30, 2018
Thanks for the timely response, appreciate it

alvinum

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Reply 3 on: Yesterday
Excellent

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