Posted on 04/06/2007 12:30:30 PM PDT by farlander
Well, when you have shortage of labor across the economy, you get increases in all prices. Unit labor costs are a major component in just about everything, isn’t it ? Those costs are always passed on to the consumer - corp’s don’t sacrifice their profits unless they have no choice. Usually they do.
I still contend that too low of unemployment is an inflationary pressure (one of many).
Usually.
Unit labor costs are a major component in just about everything, isnt it ?
Sure.
Those costs are always passed on to the consumer - corps dont sacrifice their profits unless they have no choice.
I agree. Now, if the money supply is constant, the consumer can't pay 5% (or whatever %) more across the board for that higher priced stuff. So, they buy less of something (or less of everything) and that price will fall.
Average it out, the consumer has the same to spend, zero inflation.
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