Last year I found 2 or 3 questions about this topic and I also think that there was a questions in the real exam about this. I remember that I had a ver Intuitive way to see it but now I cant remember the intuitive rational… to answer something like: When AD is expected to rise but it does rise less, then the employer win (earns) more. Or another question would be: Id AD is expected to lower and it does not, then the worker win… Anyone has the logic of it? It should be in reading 26 (inflation) thanks
Here’s one way to look at it… Not sure how official it is: when employees expect high inflation, they will require higher wages to compensate for that inflation. If inflation doesn’t end up being this high (AD didn’t grow as much as expected) then they get higher wages without associated inflation… hence they gain. The other way around for the other side.
reebs81 Wrote: ------------------------------------------------------- > Here’s one way to look at it… Not sure how > official it is: > > when employees expect high inflation, they will > require higher wages to compensate for that > inflation. If inflation doesn’t end up being this > high (AD didn’t grow as much as expected) then > they get higher wages without associated > inflation… hence they gain. The other way > around for the other side. thanks! that is what I was looking for… but I don´t know why it was the other way arround in my 2008 notes… I hope that you are right with that.