Question

1. It has been often said that it may take years for the spike of unemployment rate in the current environment to be reversed slowly. Eplain the reason for that argument.

2. What is the likeliest outlook for the inflation over the next year or so, given the current economic circumstances?

(both need to be 10-12 sentences long)

it should be more focused on conceptual answering and minimal numerical as possible

Answer 1

Ans. 1;

It was rightly said earlier that it will take many years for the spike of unemployment rate. It was because of due to ongoing continuous economic activity. Reversals were not much likely to happen in this type of environment. But the spike of unemployment rate is already lifetime high in current pandemic situation due to COVID-19. Many people have lost their jobs due to the recent corona virus pandemics. Experts believe that this will last long and it may have permanent dent on the people’s livelihood. Now unemployment is very high and world economies are facing stress due to the pandemics. Many economists suggest that people need money for their livelihood which can be only possible in running market. Due to the lockdown many country’s facing challenges of unemployment and hunger. Hence, once the corona virus vaccine will be developed then only we are going to revive the economy. The argument is very optimistic in current situation.

Ans. 2;

Likeliest outlook for the inflation over the next year or so will be very high. There are many reasons for the inflation will increase. Such as high unemployment and pandemic situation due to COVID-19. Since most of the countries are under lockdown in order to fight against corona virus. The pandemic has affected so much, people are out of job and money and essential items cost has been also increased. There are phenomenal changes in inflation at the other hand high unemployment rate which will have high impact on inflation in coming years. The other reason is that there is less supply chain has been also hampered which is causing turbulence in the economy. It is also leading to the inflation because of the gap. The current economic circumstances are likely very challenging and it may result in high inflation if it cannot be controlled by the government’s monetary policy. As per experts in next 5 years inflation is expected to be stabilizing around 4 percent. A more optimistic outlook can be seen in this regard.