What is the relationship between inflation and unemployment?
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Jasz
VIP Contributor
Inflation and unemployment are two economic ideas that are often misunderstood. The US Bureau of Labor Statistics reports the national unemployment rate each month and it is one of the most readily available indicators of the health of the economy. To really understand how they relate, however, it helps to start by looking at what inflation is, what causes it, and how the Federal Reserve can try to mitigate its effects.
The relationship between inflation and unemployment is an important part of macroeconomics. The Phillips curve describes this relationship.
Inflation and unemployment are two opposite conditions that can occur in an economy. When inflation occurs, these types of assets increase in value over time. Conversely, when high levels of unemployment occur in an economy, employment opportunities decline rapidly.
Inflation and unemployment are two important economic variables that are related in the long run, but not in the short run. Inflation can be defined as a rise in the general level of prices for goods and services. Unemployment is a measure of the number of people without jobs who are seeking work to support themselves and their families. A better understanding of these concepts helps you make sense of real-world events, such as how employment opportunities affect inflation.
The relationship between inflation and unemployment is an important part of macroeconomics. The Phillips curve describes this relationship.
Inflation and unemployment are two opposite conditions that can occur in an economy. When inflation occurs, these types of assets increase in value over time. Conversely, when high levels of unemployment occur in an economy, employment opportunities decline rapidly.
Inflation and unemployment are two important economic variables that are related in the long run, but not in the short run. Inflation can be defined as a rise in the general level of prices for goods and services. Unemployment is a measure of the number of people without jobs who are seeking work to support themselves and their families. A better understanding of these concepts helps you make sense of real-world events, such as how employment opportunities affect inflation.
Good-Guy
VIP Contributor
Inflation and unemployment have a really deep connection with each other and most of the people in world should try to understand the root cause of the condition in order to find solutions. Whenever the inflation rises, it affects businesses in a really horrible way. As a result of inflation, the prices rise and the businesses have a really harder time retaining employees. Cutting the production cost is not always that easy as this results in many companies facing economical problems in business. Whenever the inflation hits a country, the sales of specific items decrease and this might result in financial losses.
When the companies are not able to deal with such losses, they usually suffer from huge losses and even go bankrupt as a result. An employee is dependent on the company's financial success in order to secure his job. If a company itself is not able to maintain itself, then how can it provide job guarantees to its employees? Inflation is also negatively effecting many developed countries, including the United States. usually, inflation rises quicker than people's raise in pay. This is exactly what is happening in the United States, as some organizations such as The New York Federal Reserve suggest. We all need to fight this big issue.
When the companies are not able to deal with such losses, they usually suffer from huge losses and even go bankrupt as a result. An employee is dependent on the company's financial success in order to secure his job. If a company itself is not able to maintain itself, then how can it provide job guarantees to its employees? Inflation is also negatively effecting many developed countries, including the United States. usually, inflation rises quicker than people's raise in pay. This is exactly what is happening in the United States, as some organizations such as The New York Federal Reserve suggest. We all need to fight this big issue.
sincerem
VIP Contributor
Both aren't conducive to better survival. Unemployment and inflation are the worst any one can think of. Inflation is different from unemployment but their characteristics is similar. Because you simply find life difficult when any of them surfaces. With inflation comes unexpected increment of goods and services. Whereas, unemployment simply means less job availability, scarcity of work in the other hand. Any country suffering from the two is simply after he'll, and my country is a hell, because it is suffering from the two no doubt. We are surviving because, we are working and not the govt helping us out. Instead they want us death, that's why everything is driving forward and their is no solution at the moment to cut it down. Everyone is simply selling their products or offering their services higher in order to survive. You wouldn't keep your own products cheaper whereas another's own is very high, it doesn't happen that way.
Kingsley
Valued Contributor
Inflation and employment are both macro economic problems and inflation can force people out of business and even their jobs, leading to unemployment. Inflation are of different types, but I will focus on the literal meaning of inflation in the economic terms which simply means the continuous rise in the prices of goods and services. When the prices of goods and services begins to rise astronomically in an economy, first you will notice that the purchase power of the currency will begin to fall and become weaker.
I will use the Nigeria naira for instance as at 2015 a bag of rice was sold between N6000 to N7500 per bag and due to poor policies made by the current administration, the prices of goods and services has skyrocketed and now a bag of edible rice goes do between N28,000 to N32,000 per bag. You can imagine how much naira is now chasing a bag of rice this is a clear situation of inflation. This has thrown some people out of the rice of business as they could not keep up with the cost of rice and thereby causing unemployment. This same situation applies to all the goods and services in Nigeria today.
I will use the Nigeria naira for instance as at 2015 a bag of rice was sold between N6000 to N7500 per bag and due to poor policies made by the current administration, the prices of goods and services has skyrocketed and now a bag of edible rice goes do between N28,000 to N32,000 per bag. You can imagine how much naira is now chasing a bag of rice this is a clear situation of inflation. This has thrown some people out of the rice of business as they could not keep up with the cost of rice and thereby causing unemployment. This same situation applies to all the goods and services in Nigeria today.
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