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| Topic: |
Business
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| Number of pages / Number of words: |
5 / 1346 |
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With the occurrence of the high rate of inflation, it has become one of the main economic objectives in many economies all around the world. Although inflation was a major concern worldwide, it seems that today deflation has become far more important. Although there were many cases of deflation in the past, it is usually
associated with The Great Depression period 1932-1933 causing the decline of economic growth...
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John Maynard Keynes a famous macroeconomist who lived during The Great Depression in his analysis stated that nominal wages are downwardly inflexible. Consequently, when there is a decline in prices, employers are not able to cut the nominal wages, which leads to a raise in prices of labour. A rational behaviour for a firm in that situation is decreasing demand for labour, which causes an increase in unemployment rates as well as losses in manufacture...
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