incomes policy definition

incomes policy

Measures through which a government attempts to control escalation in incomes (wages, salaries, dividends, rents) to restrain escalation in prices (inflation) without increasing unemployment. Believers in the cost push inflation theory are the greatest advocates of incomes policy, whereas believers in the demand push Inflation theory regard it as a supplement to fiscal measures. Monetarists (who believe inflation is caused by growth in money supply) consider it irrelevant in controlling inflation.

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