Why is not possible to have low inflation rates with high unempolyment.
2006-09-04 13:16:04 · 3 answers · asked by mcsquare3245 2 in Business & Finance ➔ Other - Business & Finance
It's the other way around. The low employment will cause high inflation due to higher wages and the cost getting passed on to consumers.
2006-09-04 13:24:28 · answer #1 · answered by Bill 6 · 0⤊ 0⤋
Inflation is the general increase in price level. This happens when people have more money to spend on the scarce resources(meaning lot of people are employed)i.e demand is high. So if people are unemployed, their demand would decrease and that wouldnt cause the price level to increase. So i guess that is possible.
2006-09-04 20:21:12 · answer #2 · answered by WORLD CLASS 3 · 0⤊ 0⤋
Low inflation generally occurs with high unemployment. I think you are mistaken. If peopel have jobs, they spend money, driving up prices. If they dont have jobs, they dont spend money, prices stay lower.
2006-09-04 20:30:27 · answer #3 · answered by dontdoit! 2 · 0⤊ 0⤋