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Goldilocks economy 2017 full#
seems to be getting close to a full employment scenario, which will trigger inflation. Last year was a good year-much better than economists expected, and the results are easily shown in stock market prices-but the U.S. How long can the economy stay hot but not overheated? According to central banks, not too long. This curve describes the inverse relationship between unemployment and inflation, as lower unemployment leads to competition over employees and salaries increase, while higher unemployment means that there is an oversupply of employees, which triggers decreasing salaries, thus lowering inflation. This phenomenon was first described by the economist William Phillips and is known after him as the Phillips Curve. This is a rare state from a historical perspective but also a rare scenario based on economic theory, which, as well as empirical evidence, shows a negative correlation between unemployment and inflation. Inflation is within the range that central banks can handle, and pressure for salary raises is still held in check. Interest rates are increasing at a very moderate pace and not really slowing growth. Growth in 2017 is estimated to be around 3.6% and expected to reach 4% next year. The global economy is growing at a fast pace.
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This will hurt the growth of the economy, as economies love cheap money. Inflation-low inflation is mandatory otherwise, the central banks would have to increase interest rates, thus increasing the cost of borrowing and receiving credit for consumption and other purposes, essentially making the cost of money higher.Growth-first, the economy needs to grow but at a moderate pace so as not to become overheated, which can affect the second point-relatively low inflation.How can the economy remain in this Goldilocks position?
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A Goldilocks economy is an economy that is somewhere between the tides-not too high and not too low-and that is what makes it sustainable. Goldilocks and the Three Bears is not only a fairy tale but also a term used to describe the state of the global economy today.