Expalin how can inflation derail the economy

Assignment Help Macroeconomics

Reference no: EM1330122

Inflationary expectations and wage inflation

On July 20, 1993 Alan Greespan, chairperson of the Board of Governors of the Federal Reserve System, testified before a congressional committee. He said: "The role of expectations in the inflation process is crucial. Even expectations not validated by economic fundamentals can themselves add appreciably to wage and price pressures for a considerable period, potentially derailling the economy from its growth path."

(a) If workers are convinced that inflation is about to increase greatly, what effect does this have on their wage demands? Do their wage demands fuel further inflation?

(b) If the managers of firms are convinced that inflation is aobut to increase greatly, what effect does this have on their pricing decisions? Do their pricing decisions fuel further inflation?

(c) How can inflation derail the economy from its growth path? Cite cases in the past where inflation derailed the U.S. economy from its growth path. Be specific.

Reference no: EM1330122

Questions Cloud

Determine the target population : Determine the target population to be assessed and the purpose of the survey.

Pre-employment interview methods : Pre-Employment Interview Methods - Your boss asks you how she can improve the accuracy of pre-employment interviews.

Explain the largest markets where company products are sold : explain The largest markets where company products or services are sold and Strategies that the companies have used to grow

Do you think the nichepreneur strategy might work : Do you think the Nichepreneur strategy might work for Someone just out of college without any work experience or worldly experience, are they more likelyto find defeat and disappointment? Explain.

Expalin how can inflation derail the economy : Expalin how can inflation derail the economy from its growth path.

Affects of pay on worker performance : Affects of pay on Worker Performance - pros and cons of a pay for performance system coming to all salaried and hourly employees.

Illustrate what should the fed do in inflation continues : Illustrate what should the Fed do in inflation continues to fall and eventually starts to become deflation.

Explain about risk propensity : Do you believe that this will foster faster decision making by managers? Or, in opposite, do you believe that a low risk-taking personality will act with the same speed regardless of such technology

Address the scenario listed below : Address the scenario listed below. Support your response with appropriate cases, laws, and other relevant examples research and cite research, using APA guidelines.

User Account

All Pages