Citation and Information Links

Citations:
"SOLUTIONS: How to Reduce Unemployment." The Washingtion Times. Web. 04 Apr. 2012. <http://www.washingtontimes.com/news/2009/sep/27/solutions-what-should-be-done-reduce-unemployment/>.
"Unemployment Solutions." About.com US Economy. Web. 04 Apr. 2012. <http://useconomy.about.com/od/suppl1/p/Unemployment-Solutions.htm>.
"Cartoon Info." Web. 04 Apr. 2012. <http://cartoonaday.com/images/cartoons/2011/09/will-work-for-food-unemployment-cartoon-598x427.jpg>.
"Economic Costs of Unemployment." Tutor2u. Web. 04 Apr. 2012. <http://tutor2u.net/economics/content/topics/unemp/costs_of_unemp.htm>.
Brechling, Frank. JSTOR. Web. 04 Apr. 2012. <http://www.jstor.org/discover/10.2307/1830371?uid=3738392>.

"

Solutions to get out of inflation

Solutions To Get Out Of Inflation



Sudden inflation could be detrimental to economy. It could discourage investment activities and the growth rate of the economy might slow down. So, to stop inflation or to solve problems that result from inflation, people should spend less money, and invest. The federal bank should reduce money available in the market by selling bonds or reducing money lent to other banks.

Solutions to Unemployment

Monetary Policy: When the Federal Bank takes out money from its reserve to support unemployed people by offering less taxes on borrowed money making it easy for them to start businesses and create more job opportunities.

Fiscal Policy: This is when the government encourages more spending and cuts taxes to encourage people to stimulate the economy and get more money pumped in and in a process, make the economy in need for more people to work.

Government Spending: The government will have to step up to spend huge sums of money on the economy if things are going to slowly and desperation comes at hand. This will create more job opportunities for the people by them having a capital base to work off and governmental jobs will be provided by public firms and sectors.

A real life example of the government taking full charge of unemployment can be seen in this article:
http://www.washingtontimes.com/news/2009/sep/27/solutions-what-should-be-done-reduce-unemployment/

Why, then, is Inflation and Unemployment Linked?

Inflation is often defined by the surplus quantities of money floating around, and is usually coupled with the increase of the said quantities of money. Although the long term effect is primarily the higher level of prices, the short-run effect was broken down effectively in the book Essentials of Economics:


- increasing the amount of money in the economy stimulates the overall level of spending and thus the demand for goods and services.

- higher demand may over time cause firms to raise their prices, but in the meantime, it also encourages them to hire more workers and produces a larger quantity of goods and services.

- more hiring means lower unemployment

So less inflation means greater unemployment!
A notable example of this, the Great Depression, comes to mind.

Tradeoffs Between Inflation and Unemployment

What is Unemployment?

Unemployment is simply the gravity of people with out jobs in an economy. Whereas unemployment rate is the increase and decrease of the number of unemployed people in a region at a certain period of time. There are several causes of unemployment, which usually start from individuals and sometimes rubs off to the government's inability to create job opportunities.

Causes and Effects of Unemployment

Causes of Unemployment

Financial Problems- When an individual faces financial problems when trying to start up a business or keeping the business in motion, things will collapse causing the individual to lose his job or hope for work. How can one start a business without initial capital? When there are no business, there are no jobs for numerous people.

Emotional/Personal Problems- When individuals are going through rough days or rough times with their family and (or) personal lives, they usually tend to break focus from their work and produce bad results. This causes workers to get fired and lose jobs hence leaving people stranded without jobs.

Effects of Unemployment

Lost of Outputs of Goods and Services- Unemployment wastes the marginal resources that can be used to produce an extra unit of goods or services. The hours that unemployed people don't work causes huge losses to the firms.

Fiscal Costs to the Government- As people become unemployed,  the government is forced to collect higher taxes and revenues to account for their needs. This increases taxation, government expenditure and causes the government to collect money from the people and use it to fix unemployment instead of using it for something else to build infrastructure and other national items.

Dead Weight Loss Investment in Human Capital- Workers who are unemployed lose their skill over long periods of time. This reduces their chance of getting employment later as their skill would have deteriorated forcing them to live their future deskilled and unemployed.

Causes and Effects of Inflation

Causes of Inflation

① When the amount of money supplied by the government exceeds the money demanded by the people, inflation occurs. Its the same principle as when the demand is higher than the supply of the good then  the price of a good increases.

② Inflation sometimes occurs due to the increase of the cost. When there is an increase of wages, price of resources and oil, the economy might suffer inflation. The price of resources can increase because of the increase of the exchange rate.

③ If monopolistic companies control the market and increase the prices of goods, inflation can also happen.

Effects of Inflation

① There are disadvantages for the people who own cash and bonds but advantages for people who own real properties such as houses or gold.

② Wage workers and loaners have disadvantages and debtors have advantages. These two factors combine and create an unfair distribution of wealth.

③  Because domestic goods get more expansive compared to foreign goods, the country imports more and exports less.

What Is Inflation?

Inflation is the rise in the price and values of goods and services overtime in an economy
A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money.

Price Inflation is a result of "monetary inflation". Monetary inflation is a result of government increasing money supply.The result of inflation is price increase and as a result the currency goes above the value of available.