Question

Anybody can explain the situation that cause the number of inflation and unemployment, and also internal situation economy in China from 2009-2015 I can not find Chinese blog about rate inflation and unemployment 2009-2015 and I have difficult to understand language because usually in google English only show news, no information such as blog

Answer 1

Inflation means there is a sustained increase in the price level. The main causes of inflation are either excess aggregate demand (economic growth too fast) or cost push factors (supply-side factors). Main causes of inflation

Demand-pull inflation: - If the economy is at or close to full employment, then an increase in AD leads to an increase in the price level. As firms reach full capacity, they respond by putting up prices leading to inflation. Also, near full employment with labour shortages, workers can get higher wages which increase their spending power. We tend to get demand-pull inflation if economic growth is above the long-run trend rate of growth.

Cost-push inflation: - If there is an increase in the costs of firms, then businesses will pass this on to consumers. There will be a shift to the left in the AS. It can either caused by rising wages, Import prices, raw material prices, Profit push inflation, declining productivity.

The causes of unemployment are divided into demand deficient like High interest rate, Global Recession, Negative multiplier effect, Financial Crisis and supply side like Frictional, Structural, Geographical immobility ad real wage unemployment.

The increased population leads to higher unemployment rates. As the number of people who are looking for jobs is increasing, it is more difficult to arrange jobs for all these huge numbers of workers. In this situation the demand for work will be more than the available occupations. This will result in increased number of unemployed individuals. An unemployment situation continues as long as the demand-supply gap persists. This is very obvious in countries like China and India. The cause of unemployment is lack of education or skills for employment. This happens when the qualifications of a person are not sufficient to meet his job responsibilities. If the education was not directed towards the labour market then a mismatch occurs thus leading to structural unemployment.