the inflationary spiral explains the causes and effects of high inflation. the spiral usually begins with an…

the inflationary spiral explains the causes and effects of high inflation. the spiral usually begins with an increase in demand. what is the direct effect of this increase? producers raise prices to continue to make a profit. the government prints more money, lowering the value of money. workers negotiate with employers to receive more money. consumers need higher wages to keep up with rising prices.

the inflationary spiral explains the causes and effects of high inflation. the spiral usually begins with an increase in demand. what is the direct effect of this increase? producers raise prices to continue to make a profit. the government prints more money, lowering the value of money. workers negotiate with employers to receive more money. consumers need higher wages to keep up with rising prices.

Answer

Brief Explanations:

In an inflation - spiral, when demand increases, producers raise prices to maintain profit margins as they face higher costs or increased demand pressure. The government printing more money is a later possible response, workers negotiating for more money and consumers needing higher wages are subsequent effects as prices rise. The direct effect of an increase in demand is producers raising prices.

Answer:

Producers raise prices to continue to make a profit.