The business sector cannot respond to this excess demand by expanding real output because all available resources are already fully employed. Evidenced by a deficiency of total demand, the economy experiences a period wherein output and employment are both declining, while at the same time the general price level is increasing. Prices and wages tend to be flexible upward but inflexible downward. These three theories are not unrelated or mutally exclusive. All three can operate simultaneously.
Economists disagree as to the output effect of inflation.
Some feel that mild demand-pull inflation is a stimulus to output and employment. Others point out that inflation can cause the national output to fall, thus creating a rise in the unemployment rate. The Mason Center offers customized workshops and seminars to address the specific needs of your company. The focus of the seminar is determined through a series of employee interviews.