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Inflationary bias is the outcome of discretionary monetary policy that leads to a higher than optimal level of inflation. Depending on the way expectations are formed in the private sector of the economy, there may or may not be a transitory income increase.
It is the inflation accounting model required in International Financial Reporting Standards implemented in 174 countries. Process of Inflation Accounting Inflation Accounting refers to the process of adjusting the financial statements of a company to show the real financial picture of the company during the inflationary period. Inflation ...
Demand-pull inflation occurs when aggregate demand in an economy is more than aggregate supply.It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve.
Supply theories are based on the neo-Keynesian cost-push model and attribute stagflation to large disruptions to the supply side of the supply-demand market equation, such as when there is a sudden scarcity of key commodities, natural resources, or the natural capital needed to produce goods and services. [22]
The introduction of inflationary expectations into the equation implies that actual inflation can feed back into inflationary expectations and thus cause further inflation. The late economist James Tobin dubbed the last term "inflationary inertia", because in the current period, inflation exists which represents an inflationary impulse left ...
Tariffs tend to be inflationary because they raise the cost of imported goods, prompting businesses to either absorb the higher expenses or pass them on to consumers through price increases.
A macroeconomic model is an analytical tool designed to describe the operation of the problems of economy of a country or a region. These models are usually designed to examine the comparative statics and dynamics of aggregate quantities such as the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the level of prices.
The GDP gap or the output gap is the difference between actual GDP or actual output and potential GDP, in an attempt to identify the current economic position over the business cycle. The measure of output gap is largely used in macroeconomic policy (in particular in the context of EU fiscal rules compliance). The GDP gap is a highly criticized ...