Question

The problems of aggregate inflation and unemployment are

Answer 1

If there is an increase in aggregate demand, such as what is experienced during demand-pull inflation, there will be an upward movement along the Phillips curve. As aggregate demand increases, real GDP and price level increase, which lowers the unemployment rate and increases inflation.

Answer 2

The ‘problems of aggregate inflation’ and unemployment are major topics of macroeconomics.

Explanation:

• When there is a rise in inflation the prices increase and if the prices increase the workers would demand higher wages.  

• This is will lead to a fall in employment leading to a decline in the unemployment rate.

• High inflation is never good for an economy since it reduces the value of money.  

• It brings down the demand of goods while the aggregate supply remains the same. This slows down the economic growth of the region.

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