Answer to Question #170787 in Macroeconomics for rashida

Question

explain two factors that contributed to rising inflation

Answer 1

Rising Wages – When trades unions present a united front, they can bargain for higher wages. Rising wages are a main cause of cost-push inflation since wages are the most significant cost for many firms.Higher wages may also contribute to increase in demand.

Declining productivity-If firms become less productive and allow costs to rise, this invariably leads to higher prices.