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Which is the worse macroeconomic problem for t economy higher inflation or higher unemployment?
Wiki User
∙ 9y ago
Inflation is worse than recession. Recessions end. Inflation is the most powerful force in the world and it keeps on keeping on. Inflation in the U.S., for example, has decreased the value of the dollar 84% since the beginning of 1969. The average rate of inflation in the U.S. is 4.1% on average for the past 30 years; at this rate the dollar loses half its purchasing power every 17 years. For detailed inflation data, see www.bls.gov. The data there includes an inflation chart sine 1913. Since the mid 1970s, the slope of the chart is up on an angle of approximately 45 degrees.
Wiki User
∙ 15y ago
Wiki User
∙ 14y agoThe idea comes from Economic cycle. See the related link below.
The main idea is that while booming the unemployment is shrinking. People are needed to work/produce and employers are willing to pay more and more to get the most qualified workers, thus driving the wages up. They have nowhere to take the money from but to increase the price of their product/service. Thus driving the price level up (inflation).
Wiki User
∙ 12y agoInflation because it affects all of us at a comparatively lower cost whilst unemployment affects a few of us at a relatively higher cost. Whilst there is high inflation the economy can still grow.
Wiki User
∙ 9y agohigher unemployment is much serious problem for the economy. If unemployment is low, people will have sufficient purchasing power.
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If the main macroeconomic problem is unemployment then what is aggregate demand?
Aggregate Demand is the total amount of Demand in the Economy at a given time. It is an important macroeconomic factor because it helps determine, forsee and ,when manipulated ,prevent inflation. Inflation is one of the the main macro-economic problems and is as important as unemployment.
What effect did Ford's WIN strategy have on the economy?
Inflation went down due to spending cuts, but unemployment was still a problem.
What are macroeconomic topics?
Take a look at "Macroeconomic Issues Today: Alternative Approach". Table of Contents includes the following issues: Unemployment: Is Joblessness an Overrated Problem? Inflation: Can Price Pressures Be Kept Under Control? Balancing the Federal Budget: Should we be worried about the rising federal deficit?
If inflation falls why would unemployment rise?
When economists look at inflation and unemployment in the short term, they see a rough inverse correlation between the two. When unemployment is high, inflation is low and when inflation is high, unemployment is low. This has presented a problem to regulators who want to limit both. This relationship between inflation and unemployment is the Phillips curve. The short term Phillips curve is a declining one. Fig 2.4.1-Short term Phillips curveThis is a rough estimation of a short-term Phillips curve. As you can see, inflation is inversely related to unemployment. The long-term Phillips curve, however, is different. Economists have noted that in the long run, there seems to be no correlation between inflation and unemployment.
What problem did the move toward a market economy economy cause?
inflation due to lack of goods and profit motive unemployment due to change in objective and structure of the economy industrial unrest due to labour unrest lack of markets lack of welfare system changes in the international trade pattern
What are the current macroeconomic problem in South Africa?
inflation,transportation,unemployment
If the main macroeconomic problem is unemployment then what is aggregate demand?
Aggregate Demand is the total amount of Demand in the Economy at a given time. It is an important macroeconomic factor because it helps determine, forsee and ,when manipulated ,prevent inflation. Inflation is one of the the main macro-economic problems and is as important as unemployment.
What effect did Ford's WIN strategy have on the economy?
Inflation went down due to spending cuts, but unemployment was still a problem.
What are macroeconomic topics?
Take a look at "Macroeconomic Issues Today: Alternative Approach". Table of Contents includes the following issues: Unemployment: Is Joblessness an Overrated Problem? Inflation: Can Price Pressures Be Kept Under Control? Balancing the Federal Budget: Should we be worried about the rising federal deficit?
What was the main problem with communist economy in China?
Inflation.
If inflation falls why would unemployment rise?
When economists look at inflation and unemployment in the short term, they see a rough inverse correlation between the two. When unemployment is high, inflation is low and when inflation is high, unemployment is low. This has presented a problem to regulators who want to limit both. This relationship between inflation and unemployment is the Phillips curve. The short term Phillips curve is a declining one. Fig 2.4.1-Short term Phillips curveThis is a rough estimation of a short-term Phillips curve. As you can see, inflation is inversely related to unemployment. The long-term Phillips curve, however, is different. Economists have noted that in the long run, there seems to be no correlation between inflation and unemployment.
What problem did the move toward a market economy economy cause?
inflation due to lack of goods and profit motive unemployment due to change in objective and structure of the economy industrial unrest due to labour unrest lack of markets lack of welfare system changes in the international trade pattern
How does inflation lead to unemployment?
The idea comes from Economic cycle. See the Related Link below. The main idea is that while the economy is booming the unemployment is shrinking. People are needed to work/produce and employers are willing to pay more and more to get the most qualified workers, thus driving the wages up. They have nowhere to take the money from but to increase the price of their product/service. Thus driving the price level up (inflation). After reaching the highest point - the economy goes into crisis/recession. The main problem is overproduction. Production shrinks. Producers cut costs: decrease output, layoff people. In this period the unemployment begins to grow.
When inflation becomes a problem what action will fed likely take with regard to interest rates?
when inflation becomes a problem the action the fed will RAISE INTEREST to slow the economy down a little.
Concept of unemployment?
Unemployment means there are many job seekers in the economy but less jobs are available. Now a days in the world it is the hard and tough problem.
How can mixed economy system solve the problem of unemployment?
It cant..The way this System is built you will always have Winners and Losers.
If full employment GDP is greater than equililbrium GDP what problem is this economy facing?
I think it is inflation but I am not 100% sure on that.
