ABSTRACT
In order to give a complete account of the problems of open inflation, it would be necessary to deal with the whole of the dynamic theory, but this cannot be attempted here. It is necessary to show how the magnitudes considered, such as the inflationary gap in the commodity-markets, the factor-gap, the speed of the rise in prices. This chapter considers a very simple dynamic model is set up, which shows the ratio of price to wage-rate, the excess demand for commodities and labour-services and the speed of the rise in prices of commodities and in wage-rates, under inflationary conditions. It takes the effects of various changes of data in this model are considered. It also reviews the importance of monopolism. Finally, the chapter shows how this simple dynamic model may be regarded as a special case of a more general model, which covers both the case of inflation and the case where there is no inflation in the system.
