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ECO 203 Week 4 DQ 2 Inflation (Old)

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Week 4 DQ2

Inflation

On pg. 255 in your text, The Economics in Practice describes the increase in food prices around the world in 2008. Since food, in large measure, affects the real income of households, increasing prices will eventually push up wages and have an impact on the aggregate supply curve. Central banks were very worried about the prospects for inflation becoming generalized. To stop inflation, what would the Fed be likely to do? What are the consequences for the economy? Specifically, what would be the effects on employment and unemployment given the actions taken by the Fed? Respond to at least two of your classmates’ postings


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