A manager needs to monitor The price of inputs in the price of outputs. This is because the difference between the two is the profit margin, or degree to which the company is making a profit.
The Phillips Curve shows an inverse correlation between () and () using data from 1861 - 1958. It implies the Fed could achieve low unemployment at the cost of high inflation.
The Phillips Curve broke down in the 1970s when workers started demanding higher wages expecting higher inflation. Higher wages pushed up the production cost, decreasing production and employment.
Describe major takeaways briefly- A banker, or an individual who is loaning money is more hesitant to lend money to individuals for longer periods of time. The tends to be Higher inflation rates and interest rates on long-term investments because individuals loaning money have no idea what inflation will be in the future.
prices of inputs and outputs
Input prices are the price of goods at a company purchases in order to carry out production. Output prices are when the company finishes the product, and sells it on the market.
Itβs easier to pass on costs increases when the following is true:
Describe major takeaways briefly- Inflation clauses and long-term contracts are there to ensure that both individuals benefit over a long period of time.
Describe major takeaways briefly- Our measurements of inflation are not 100% accurate, but do provide lots of information and statistics that will help us create highly possible predictions.
A business for whom raw materials constitute a major cost should hedge against the risk of sharp increases in the price of raw materials by:
Explan each of the following terms in your own words. The author explains the terms in the textbook. If necessary, you may also Google the term on the Web. Good resources include:
Explain the terms in your own words briefly.
Inflation is when the price of goods and services increase, and the price of money decreases.
A economic indicator that tracks the price of goods and services that Consumers pay.
Economic indicator that tracks the price of goods and services that producers pay.
A graphic representation of the economy relationship between the rate of unemployment, and the rate of change when it comes to wages
High unemployment, and rising prices. This has occurred repeatedly in the developed world since 1970.
Describe the characteristics of the following events briefly.
The author writes the Phillips Curve broke down in the 1970s. Elaborate.
The Phillips curve broke down as policymakers began to use it. This curve is the relationship between inflation and unemployment, and it broke down in the 1970s. This happened because workers anticipated high inflation, and demanded higher wages. Companies cannot keep up with the demands, and started letting them go.