Essay On Unemployment And Inflation

Essay On Unemployment And Inflation-25
Some argue in climate where there is chance of deflation, we should target a higher rate of inflation (e.g.3 or 4%) It is usually assumed inflation makes savers worse off.

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In Unemployment and Inflation Unemployment and inflation are two completely different economic issues that are, surprisingly, very much related to one another.

When dealing with both of these economic factors, it is important to understand that these topics are an extremely important part of today's economic world.

As well as experiencing fluctuations in unemployment, most countries have experienced an increase in average unemployment rates from one cycle to another.

Unemployment occurs when people are actively looking for jobs but can't find one.

But, generally when we talk about high inflation in the UK / Europe, we mean an inflation rate of 5-20%.

Off the top of my head, I believe the highest rate of inflation in UK since 1945 is around 27% in the 1970s. Inflation or 0 or 1% would be most likely to cause economic stagnation.

Central Banks and governments often face a choice between reducing inflation or reducing unemployment.

Which imposes the greatest cost on society - inflation or unemployment? If we are talking about hyperinflation (over 10,000% a year) then inflation can definitely devastate an economy leading to a breakdown in normal economic transactions.

So, construction workers may be unemployed when the weather is especially poor. Teachers and ski instructors may not work in the summer. unemployment rate must be equal to the natural rate of unemployment.

The medium run interest rate is affected by shocks to demand and supply.

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