Definition factors in inflation


Problem 1) As the economy grows and productivity increases, real wages tend to rise, on aggregate (assuming there is not excessive slack in the labour market, i.e jobless growth scenario recently seen in U.S.)

Problem 2) Real wage growth , over time, by definition factors in inflation. Inflation is measured by the average prices of a bundle of  (representative) goods. So I am assuming very luxury/elitist products/services will be excluded from the bundle.

Solution Preview :

Prepared by a verified Expert
Macroeconomics: Definition factors in inflation
Reference No:- TGS02096429

Now Priced at $20 (50% Discount)

Recommended (97%)

Rated (4.9/5)