Why do sticky wages and prices increase the impact of an economic downturn on unemployment and recession?

Q: What is demand pull and cost push inflation in economics?

A: Demand pull inflation in simple words we can say that it is the inflation that generally describe…

Q: Describe what happens when firms and workers underestimate future prices in the economy. Focus your…

A: An economy consist of households and business working in a circular flow in order to achieve their…

Q: Does it make sense that wages would be sticky downwards but not upwards? Why or why not?

A: Sticky wage is a concept of the labor market where the wages are set to a downward trend so that the…

Q: Suppose that a decrease in the demand for goods and services pushes the economy into recession. What…

A: The demand is the main factor that determines the developments in the economy. The increased demand…

Q: How do changes in aggregate demand and aggregate supply might cause inflation in the economy?

A: The aggregate demand is the summation of the demand from all the economic agents. There are mainly…

Q: What happens when firms and workers underestimate future prices in the economy.  On what would…

A: The expectations and the actual level of inflation in the economy play a very crucial role in the…

Q: Is it good for an economy to experience sudden inflation or deflation? Explain with examples

A: Answer:- Lоw-level  inflаtiоn  (2–4  рer  сent)  wоuld  indiсаte  the  eсоnоmy  is  dоing  well,…

Q: Discuss the short-run tradeoff between inflation and unemployment.

A: In short-run inflation and unemployment are negatively related while in the long run, these are…

Q: Is it possible to graph this situation through aggregate demand and supply? I know this causes…

A: In an aggregate demand-aggregate supply model, equilibrium occurs at such a price level where…

Q: Do you think it is rational for workers to prefer sticky wages to wage cuts, when the consequence of…

A: In general, the sticky wages mean that the wages remain at the same level while revenue or sales…

Q: Why is inflation a macroeconomic problem? Why can't an inflation rate of 0% be achieved?

A: In an economy, macroeconomic problems refer to the economic uncertainties that affect the economy as…

Q: What causes the rate of inflation in macroeconomics?

A: Inflation reflects a constant rise in the price level over time or it is a sustained increase in the…

Q: If actual inflation exceeds anticipated inflation, who will lose purchasing power and who will gain?…

A: Actual inflation is the rate of inflation measured by the consumer price index and it is unexpected,…

Q: What caused the Great Recession of 2008 in the United States?

A: The great recession of 2008 in the United States is classified as the worst financial crisis as many…

Q: f the current unemployment rate is 8% and the natural rate of unemployment is 6%, what do we know…

A: The natural rate of unemployment is the lowest level of unemployment that an economy can sustain…

Q: explain to me these periods in the market cycle: Boom, Bust, and Recovery.

A: Boom-and-bust periods are characteristics of business growth during the economic boom and business…

Q: if the economy is in a recession, who is at fault?

A: Recession refers to the situation of lower economic activity. During recession, economic activities…

Q: What can be used to reduce aggregate demand and thereby control demand pull inflation? One word

A: According to the given question Demand pull inflation is basically known as inflation which…

Q: What can be a reason why inflation is not occuring when government spending increases in an economy?

A: inflation refers to the sustained rise in the general price level. It is the general rise in the…

Q: When an economy approaches full employment, why does demand-pull inflation become a problem?…

A: Demand-pull inflation occurs due to a rise in aggregate demand in the economy. Since it emerges from…

Q: What were the causes and consequences of the Great Recession?

A: The great depression as the name itself suggest is one of the greatest event in the history. It…

Q: True or False? Looking along the aggregate demand curve, deflation will lead to a lower level of…

A: Aggregate demand shows inverse relationship between price and real GDP. It means decrease in price…

Q: What happens when firms and workers underestimate future prices in the economy? Explain the answer…

A: Expectation about future price and actual price is plays a significant role in the growth of…

Q: If wages on average rise at least as fast as inflation, why do people worry about how inflation…

A: Inflation refers to the hike in the price of goods and services over a given period of time which…

Q: What are the types of inflation? Explain with the help of examples? According to macroeconomics

A: Inflation is defined as the price rise goods and services in the economy. These are of three types…

Q: Drought in South Africa destroyed farm crops and drive up theprice of food. What is the effect on…

A: The destruction of crops means the availability or the supply of food will fall so there will be a…

Q: What was the lengthiest recession in France?

A: A recession is a period of continuously falling gross domestic product. A recession is detrimental…

Q: Are there any “good” supply shocks? Explain

A: A supply shock is an occurrence where the supply of a product or service, or goods and services in…

Q: Use two graphs in the AD-AS framework to compare and contrast demand-pull and cost-push inflation.…

A: Aggregate demand curve shows the relationship between aggregate quantity demanded and general price…

Q: Draw a graph that illustrates a demand-pull inflation. The graph shows the aggregate demand curve,…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which topic is more important fighting inflation or fighting a recession?

A: Inflation is the measure of increase in price level of a basket of consumption goods and services…

Q: What is the job of balancing control over unemployment and inflation, and why is it important?

A: Unemployment and the inflation both are the major factors that can hamper the economy. The pressure…