Unemployment And Unemployment Essay

The relationship between inflation and unemployment is unique. Inflation and unemployment helps to stimulate economic growth and/ or negatively impact the economy. When the unemployment is above the natural rate and the inflation rate is below the expected rate this will create a boom in the economy. On the other hand, if the unemployment rate is above the natural rate and the inflation rate is lower than expected, this will have a negative impact on the economy which could lead to a recession and if continued to a depression.

In today’s society, we have all heard about the unemployment rate. But, let’s understand what it means to be unemployed first. Unemployment is defined as someone who is over the age of sixteen without a job, who is actively

In other words, because when cost is more to manufacture, produce or deliver goods and services the extra cost is then passed down to the consumer. The opposite is for the decrease in demand. When the demand is low it costs less money to manufacture, produce or deliver goods and services, therefore the cost will decrease for both manufacture as well as consumer. Keep in mind this could be temporary or permanent.

We just talked about the cost-inflation. Conversely, what if there was an increase in demand for a particular good and/or service with little resource to fulfill that demand? How would it affect inflation? It would be considered a demand-pull inflation for the reasons mentioned above, the supply is low (limited) and the demand is high. Therefore, the price would increase resulting in an increase in inflation.

For every action there is a reaction. Now let’s see if there were an exceedingly abundance of goods and services and is easily accessible to the consumers. What do you think the effect would be according to the supply and demand theory in reference to inflation? If you said it would decrease the price then you are correct. This is also considered demand-pulled