Question

In your own words using 500 or more NO PLAGIARIZE, What are the effects of unemployment and inflation on the nation’s economy? Which one between unemployment and inflation do you think is more important to stabilize if the policymaker cannot do both at the same time? Discuss in detail.

Answer 1

answer: people are said to be unemployed when they are not able to get the job. unemployment include only those people who are willing to do a job but does not get it and has been searching for the job it does not include those unemployed people who are not looking for the job for long time.

inflation means increase in the prices and fall in the purchasing power of currency. the increase in prices of goods or services leads to decrease in their demand as people get less goods or services than before.

unemployment and inflation both the situation has adverse effects on the economy of a nation as they affect the gross domestic product (GDP) of a country. when unemployment increases it leads to increase in number of unemployed people in the economy which means many people does not get income and are dependent on working people it creates burden on the economy and decreases money supply in the economy which leads to fall in aggregate demand, production and there is low investments in the economy all these factors decreases economic activities and the growth of the economy falls. when there is high inflation means the prices are increasing which will demotivate people to buy more goods or services and the aggregate demand will fall in the economy as their purchasing power has reduced it will make producers to reduce their production and to produce less they will need less labors so unemployment will also increase. the falling aggregate demand, production and increasing unemployment will decrease the real income of the economy and the growth rate of economy will fall.

the policymakers should stabilize the inflation as it has more adverse effects on the economy as it decreases purchasing power of money which badly affects the lower income groups and unemployed people