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What is Zero inflation and Mild inflation?
Zero inflation is where the economy reach a state of 0% inflation rate. This is not really good in the sense that it shows the economy is stagnant/not growing. This may turn away the investors. Mild inflation is basically low rate of inflation around 2% to 3%. Mild inflation shows that an economy is stable and indicates economic growth.
Is near zero level inflation is bad?
Though a Zero inflation is practically very difficult to achieve, very low levels of inflation are actually bad for the economy. Inflation determines the increase in prices of goods and services in a country's economy year on year. A very low or zero inflation means a very low level of growth in prices for goods and services which in turn implies that the economic growth in the country is also very poor. In a growing or flourishing economy the prices of goods and services increase in a steady and consistent manner year on year. This means the country's economy is growing steadily. Inflation rates of around 5-6% are considered ideal for countries. A very low inflation is bad for the economy and at the same time a double digit inflation is also very bad for the economy.
Why isn't full unemployment the same as zero unemployment?
Full employment doesn't mean that there is zero unemployment. Full employment only means that the economy is operating at full employment because there is only structural unemployment, frictional unemployment, and seasonal unemployment. Remaining unemployment is cyclical. Even when an economy is working properly, it will experience frictional, seasonal, and structural unemployment. (gp)
Why isn't full employment the same as zero unemployment?
Full employment doesn't mean that there is zero unemployment. Full employment only means that the economy is operating at full employment because there is only structural unemployment, frictional unemployment, and seasonal unemployment. Remaining unemployment is cyclical. Even when an economy is working properly, it will experience frictional, seasonal, and structural unemployment. (gp)
Why would unemployment in a classical economy be zero?
This may not be the answer your teacher is looking for. The classical economy has no facility to support the unemployed or unemployable. So You either work, find or grow your own food or die. No matter how you look at it, no unemployment.
Why is monetary policy more effective at fighting inflation than unemployment?
Well... first of all, inflation and unemployment are associated with the high and low stage in the economic cycle, thus it is difficult to compare. Concerning to inflation, when a Central Bank cut interest rates, it reduces automatically the supply of funds to retail banks, curtailing credit, and therefore reducing consumption and prices. But if we're trying to stimulate the economy and reduce unemployment with monetary policy, there are various problems. One is that initially we have a limit on interest rates, that is the zero bound. Other is that monetary policy has a complex process whereby it is transmitted to real economy, affecting prices of assets, bonds, real estate prices ... It is a broad and tough question, and you could find entire books on it.
Potential GDP is the same as real GDP when?
the economy is operating at full employment. Note: full employment is not the same as zero unemployment.
Why zero inflation is worse than mild inflation?
mild inflation is better because in the first place it motivates producers in producing more, since price increase is an incentive to them. secondly , excess demand will be partially regulated in mild inflation coz price increase reduces, hence, prospects of higher inflation minimised. zero inflation on the other hand demotivates producers coz there are no changes in price levels, this leads to low out put and hence, loss of GDP and consequently unemployment may crop in. by griffin masoambeta miracle year 2 bunda college of agriculture, Lilongwe university of agriculture and natural resources(LUANAR)
What is the volume of an ideal gas at absolute zero temperature?
At absolute zero temperature, the volume of an ideal gas would theoretically be zero.
Why does unemployment not go to zero during booms?
The main reason the unemployment can't fall to zero is that unemployment below NAIRU (Non-Accelerating Inflation Rate of Unemployment which is around 5%) creates a tight job market which leads workers to demand higher wages and firms to increase its prices as demand and costs go up. This situation leads to high inflationary pressures.
Does Unemployment rate ever reach zero?
the unemployment will never reach zero. because unfortunatly there will be always some one who need or requires job.................muhammad saqib...........
What is resistance of an ideal ammeter?
ideal ammeter has zero internal resistance
