Essay on Global Inflation and Unemployment

The largest cause of unemployment can be attributed to recession. The term recession refers to the backward movement of the economy for a long period. People spend only when they have to. (Nagle 2009). With people spending less there would be less money in circulation therefore, enterprises would suffer financially and people would suffer too. This is so because recession reduces the fiscal bases of enterprises, forcing these enterprises to reduce their workforce through layoffs. These enterprises lay off their workers in order to cut the costs they incur in terms of wage and salary payments.

From what is supposedly being shown in papers and on the news the U.S. economy is currently concerned about unemployment, caused by the recession. This “current macroeconomic situation” is pardoning my language freaking a lot of individuals out, because some have no idea of how it is going to get better. The news/media is not painting us such a pretty picture of it, by calling it “this decade’s depression”. The unemployment rate is at 8.2% as of July 2012, whereas the average in 1948 was at 5.6%.

1. What is inflation? Inflation is an increase in prices for goods and services (What is Inflation?).

The Undesirable temporary connection between Price increases and Unemployment. The inflation is calculated along the perpendicular axis, and the unemployment percentage is calculated along the plane axis. This can disturb both the unemployment percentage or the price increases, it can disturb the splurging and the economy. It will partake in temporary impacts in anticipation of the economy being secure.

Unemployment has been on the rise in the United States in recent years. One of the large contributing factors of this is the change in the structure of the country’s economy. Many jobs, particularly manufacturing and industrial type jobs are being outsourced to other countries. An increase in unemployment due to a change in the economy is structural unemployment. This paper will discuss how structure unemployment is causing harm to the United States economy.

The recession of 2007-8 resulted in the great number of unemployment as illustrated previous by the DKs curve that suggested an increase in unemployment leads to decreased inflation (Arnold, 2010). Many people become jobless as the banks and other financial institutions started focusing over injecting money into the economy. This problem was to be corrected by reducing government expenditure. By doing so many people lost jobs and employment was greatly reduced.

Firstly Cyclical unemployment or demand deficient unemployment is caused by a lack of spending throughout the economy and generally affects all sectors of the economy because spending is falling. To overcome this, the government needs to introduce policies which seek to boost spending throughout the economy. An example would be a loosening of monetary policy and cutting interest rates which make borrowing for individuals and businesses cheaper. They borrow money which is then spent in the economy which

The United States is currently experiencing a slow recovery from the recession of 2008-09. The current unemployment rate is 7.7%, which is the lowest level since December of 2008 (BLS, 2012). However, this rate is believed to higher than the rate that would occur if the economy was operating at peak efficiency, and it is also believed that there are structural issues still underpinning this performance. For example, the number of Americans who have exited the work force as the result of prolonged unemployment is believed to be higher than usual. In addition, the Congressional Budget Office (CBO, 2012) notes that long-term unemployment of greater than 26 weeks is at a much higher rate than normal, which will have adverse long-run effects on the economy, since workers with long-term unemployment often find their career paths derailed.

The relationship between inflation and unemployment is a topic, which has been debated by economists for decades. It is this debate that has made the opinions about it evolve. In this essay, the controversial topic will be discussed by viewing different economists’ opinions on that according to time sequencing.

By the end of 2008, the European Union began experiencing rippling effects of the United States financial crisis. Several member countries, most notably on the southern end of the continent, faced high levels of debt and unemployment. Portugal, Iceland, Ireland, Greece, and Spain, derogatively referred to as “PIIGS,” required extensive economic support from the EU in order to repay government debts and bail-out private banks. Disbursal of aid in 2010 proved successful in promoting economic recovery in some countries; however, the vast majority observed only slight economic improvement which led to doubts regarding the effectiveness of the harsh austerity measures implemented. Ireland has most clearly benefited from the financial support of the European Union as the country’s unemployment rate has dropped below ten percent and is expected to witness 4.5% GDP growth in 2016. Portugal, on the other hand, shows little fiscal improvement as evident in an unemployment rate of 13% and an expected GDP growth of only 1.6% in 2016. Although both countries faced tough financial crises in 2010, Ireland has notably outperformed Portugal in resolving the situation. The weak economy in Portugal, as well as continued fiscal hardship in the remaining “PIGS” countries, threaten the preservation of the European Union as financial inequality between the members persists.

It is a mild and tolerable form of inflation. It occurs when prices are rising slowly

As non-European companies raised the standard of competition, the prices likewise fell and the market for many European products collapsed. This directly affected the employment rate throughout Europe in many of the industries, as many jobs were no longer needed. As this need declined, labor began to demand the retention of jobs, wages, and benefits, making labor more costly (Drouin,12). The unemployment rate in Europe went from 4-5% in the 1950-60s to 10-12% during the 1970-80s (Dr. Shearer - lecture). For example, after World War II the mining workforce in the UK fell from 718,000 to 43,000, with the majority of the jobs lost during 1975-85 (Judt, 459). The steel industry also suffered. As non-European countries entered the market, the European steel industry collapsed. For example, British steelworkers lost 166,000 jobs between 1974-1986 (Judt, 459). As unemployment increased throughout Western Europe, there was a movement towards the service sector.

The European sovereign debt crisis, which made it difficult or impossible for some countries in the euro area to repay or re-finance their government debt without the assistance of third parties (Haidar, Jamal Ibrahim, 2012), had already badly hurt the economies in “PIIGS”, Portugal, Ireland, Italy, Greece and Spain. This financial contagion continues to spread throughout the euro area, and becomes a dangerous threat not only to European economy, but also to global economy.

The impact of the change interest rates and inflation has a persistent impact on the well being of any given society. For this purpose it is the understanding that each individual in society should have an understanding of what such changes bring fourth for the man on the street. In this introduction, we are going to introduce certain key points to remember when dealing with interest rate- and inflation changes.

When looking at the advantages and disadvantages of inflation, it is important to consider what type of inflation is occurring. For example,