Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

When production rises, it means the employment increases, it means there needs to be paid more wages, labour costs rises and hence price goes up,

When production rises, it means the employment increases, it means there needs to be paid more wages, labour costs rises and hence price goes up, so inflation rises.

However, looking at the formula mv=py, we know there is a neagtive relation between change in p and the changes in Y, so when Y increases, the p decreases inflation goes down, how would you say this?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles of Economics

Authors: N. Gregory Mankiw

8th edition

1305585127, 978-1305971493, 978-1337516860, 1337516864, 978-0357539200, 978-1305585126

More Books

Students also viewed these Economics questions