An inflationary situation in an economy which results out of a process of wage and price interaction...........

Finance (Phase -I & II) Inflation Trends

An inflationary situation in an economy which results out of a process of wage and price interaction ‘when wages press prices up and prices pull wages up’ called:-

Inflationary gap

Deflationary gap

Inflation spiral

Seignorage

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Explanation:

An inflationary situation in an economy which results out of a process of wage and price interaction ‘when wages press prices up and prices pull wages up’ is known as the inflationary spiral. It is also known as the wage-price spiral.

This wage-price interaction was seen as a plausible cause of inflation in the year 1935 in the US economy, for the first time.