Why unemployment and economic growth cannot happen at same time
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It is possible that we can have economic growth without causing inflation. If growthis caused by increased productivity and investment, then the productive capacity of the economy can increase at the same rate as aggregate demand (AD).
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As inflation accelerates, workers may supply labor in the short term because of higher wages – leading to a decline in the unemployment rate. ... Therefore, over the long-term, higher inflation would not benefit the economy through a lower rate of unemployment.
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