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2) WAGE-PRICE SPIRAL<br />
•During periods <strong>of</strong> inflation,<br />
employers may grant wage<br />
increases to employees<br />
(passing the increase cost on to<br />
higher prices for consumers)<br />
•If many prices are rising this<br />
way (increase in cost <strong>of</strong><br />
living), unions may dem<strong>and</strong><br />
more wage increases<br />
•This may create a wage-price<br />
spiral where wages & prices<br />
chase each other upwards<br />
Copyright © 2005 Brian Raposo
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