Individual Stocks

Inflation and the Consumer Price Index

How does the employment rate contribute to inflationary pressure?

As the economy expands, and as we move near rates of full employment, in which there remains only a fraction of the available workforce unemployed, this expansion is often accompanied by rising prices, since there are more people working and spending income on goods and services. As shortages of workers are realized in an economy at or near full employment, many economists argue that stimulating demand for goods and services by actions of the federal government, in addition to the high employment rate, may eventually lead to rising inflation rates.



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