Thursday, April 23, 2009

full employment targets and inflationary basic

low inflation may be desirable, but it also brigs significant social costs, in terms of lost output and jobs when the economy is not operating at or near full capacity. Angry voters pressure elected officials to do something when recessions idle factories and swell unemployment lines.
the full employment act 1946 and the Humphrey-Hawkins Act of 1978 committed the federal government to promoting full employment and a stable price level. particularly during the 1960s and 1970s, U.S. policymakers often pressed for full employment even at the expense of inflation. two types of inflationary pressures resulted:cost-push inflation , which results from workers‘ pressure for higher wages; and demand-pull inflation,which results from policymakers‘ attempts to increase aggregate demand for current output above the full employment level .

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