How Do Expectations of Higher Inflation Become Embedded in the Economy

question 49

Essay

How do expectations of higher inflation become embedded in the economy and affect actual inflation?

---

Definitions:

Narcotics Squad

A specialized police unit focused on enforcing laws against the illegal use and trafficking of drugs.

Compensating Differential

The variation in wages that arises to offset the desirability or undesirability of a job attribute, like risk or location.

Prison Guard

A security officer who works in a prison and is responsible for the supervision, safety, and security of prisoners.

Parole Officer

A law enforcement agent who supervises offenders who have been released from prison on parole, ensuring they comply with parole conditions.