Question

During this period, people who monitor the U.S. economy were constantly on the lookout for signs of inflation. Explain why inflation may tend to arise when output is above the full-employment level and what the initial signs might be?

Answer 1

Answer:

GDP is higher than normal

Explanation:

This is a situation where GDP is higher than the usual and it shows that the economy is above the employment level and overly active. The extra gross domestic product leads to an increase in demand for goods and services and that leads to high inflation. The initial sighs include, increase in employment rate, more wages, high demand.