8. unemployment and inflation Flashcards
1
Q
what is the relation between Unemployment and Inflation?
A
- they move opposite to one another
- econ “heats up”, creates inflationary pressure
- the better the econ -> the higher the prices (because demand is higher)
2
Q
do price LEVELS matter?
A
no
level prices increase -> salaries increase along with it (the real wage + real income remain unchanged) = individual purchasing power remains unchanged
3
Q
how do you find the real wage + real income?
A
real wage/income = wage/income rate / price level
4
Q
do price RATES matter?
A
5
Q
how to calculate inflation rates?
A
(price index year 2 - price index year 1)
_________________________________ x100
price index year 1
6
Q
the domestic costs of inflation
A
???
7
Q
interest rateesss…
A
???
