Question

1.a How does an economic system also support an environment of social advancement? Why do some social issues recur over time? What aspects of an economic system must be promoted to advance living standards beyond these issues? Give an appropriate amount of thought and explanation to these questions.

1b. Under what circumstances would inflation be tolerable in a society. Please explain in 5-6 sentences

Answer 1

Social structure is an ordered arrangement, or the, macro level of society. These may social forces, social institutions, or, patterns of institutionalized relationships. Social structure affects growth through these channels:

• individuals shifting from one socio-economic group to another
• modification of income differentials across socio-economic groups, and, sectors
• Change in welfare, and, income disparities across individuals

Inequality changes, and, sectoral shifts between socio-economic groups have an impact on inequality in the society.

Social issues that recur over time

• Strengthening and weakening of social structures on particular criteria; the criteria that do not remain the same but the social issue recurs
• Income differentials amongst sectors, leading to changes in industrial, and, social structure
• Changes in education levels amongst the population

Aspects of economic system promoted to advanced living standards

• Avoiding financial, and, economic crises; inflation, swings in economic activity, volatility in financial markets, and, foreign exchanges
• The instability that discourages investment
• The volatility that does not lead to gradual structural change but tries to hasten it

Inflation intolerable

• Inflation is a single-minded concern for many central banks.
• It can lead to high unemployment, and, marked economic slowdown as high commodity prices may require prices of other goods, and, wages to fall elsewhere
• It can be called as the cruelest tax. Unemployment levels are high when inflation is high.
• Central banks are not able to manage the rates of unemployment; when they need to increase inflation to bring unemployment rate to the natural rate; low unemployment is temporary
• It may represent a bubble in stocks, real estate, or any other segment invested in