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But why does the cause of the inflation change the effect? --t "There is no doom ii pain in death; it only hurts to die." -Quicksand [ ...reply just to this | comment on the doom ii story... | next new ] 138. Re: Ivory towers by Megabazus at Fri 2 Sep 5:22pmscore of 1 doom ii in reply to comment 137 I'm glad you asked because I don't think I made this sufficiently clear. When demand-pull inflation is in effect, the primary cause is low unemployment. This means fewer people living off social welfare programs, and more production in the economy. Greater competition for labor between firms during these periods of low unemployment is what keeps wages rising along with inflation. In a sense, a high unemployment rate is a tool for firms to keep wages low. When inflation driven by cost-push (rising oil prices) is in effect, prices rise without any accompanying gains in productivity or wages (there is no greater competition for labor just because oil prices went up.)
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