Alberto Alesina and Larry Summers summarized results showing that this phenomenon decreases as central bank independence increases.
Alberto Alesina and Larry Summers summarized results showing that this phenomenon decreases as central bank independence increases. According to the Taylor principle, an increase in this phenomenon necessitates a corresponding increase in the interest rate. Increases on the y-axis in the ADAS model represent this phenomenon, which can occur when aggregate demand grows (*) faster than aggregate supply. In 1981, the Fed chairman Paul Volcker intentionally caused a recession in order to combat this phenomenon. Milton Friedman claimed that it "is always and everywhere a monetary phenomenon," supporting the theory that it only happens due to increases in the money supply. For 10 points, name this phenomenon in which prices increase and money becomes less valuable.
Alberto Alesina and Larry Summers summarized results showing that this phenomenon decreases as central bank independence increases.
inflation [or inflation rate; or price inflation; prompt on descriptions such as increase in price [levels]; do not accept or prompt on "deflation"]