A manager needs to monitor: Your major imports and your major outputs. Profit margin affects your company vastly.
The Phillips Curve shows an inverse correlation between (unemployment) and (inflation) 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 Lyndon Johnson inaugurate Great Society social programs while the Fed kept interest rates low.
So is there a tradeoff between inflation and unemployment? Milton Friedman and Edmund Phelps says:
We should try our best to keep inflation low. Inflation shows to be detrimental if its un-kept over a long period of time.
prices of inputs and outputs
Itβs easier to pass on costs increases when the following is true:
Inflation clauses are includes in many long term deals to lower the risk for both companies. Without an inflation clause in a contract, the price of a good may become too high causing turmoil within a company. ## How accurate are our measures of inflation?
Inflation is measured by the Consumer Price Index. It is a good measuring tool when used to look at large overarching trends. However is it not accurate down to the last minute detail.
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.
Describe the characteristics of the following events briefly.
The author writes the Phillips Curve broke down in the 1970s. Elaborate.