Top Reasons Behind Inflation and Unemployment

1. Top Reasons Behind Inflation and Unemployment

2. Two Main Causes of Inflation • We have two primary causes of inflation. It includes Cost-push and Demand-pull. They are associated with price rise in economy. They are involved in a different work. The Demand-pull conditions happens when there is demand from the consumers who pulls up the prices.

3. Biggest Problem Associated with Inflation • The high inflation indicates high borrowing costs for a business. People require loans along with mortgages in the financial markets look for protecting themselves against the rise in prices and improve borrowing cost on longer-term and short term debt.

4. Most Affected by Inflation • Inflation indicates monetary value is going to fall along with purchase of small goods than before. The Inflation is going to hurt those having cash savings along with workers having fixed wages. The inflation is going to benefit those people having large debts as there is rising prices, it will be easy to pay back the debts.

5. Zero Inflation • The average consumer appreciates Zero inflation. They will get profit from low prices and a feeling of extra income. It is known as a 'feel good' factor and it gives us the confidence for spending, investment, and growth. In present situation, the low inflation has been regarded as blessing.

6. How to Stop Inflation

7. Top Reason Behind Unemployment • The consumer demand is low and it developed cyclical unemployment. The companies have lost a lot of profit with the fall in demand. Those who never hope for sales to rise soon, they should reduce the number of worker. The consumer demand is created by high unemployment. It is going to drop further and for this reason, it has been cyclical.

8. Method of measuring unemployment

9. Frictional Unemployment  Frictional unemployment has been created by the temporary transitions in the lives of workers. An example is the worker moving to new city and they need to get a new work. It consists of people who has joined labor force like college student who are freshly graduate. It has been the cause behind unemployment.

10. Structural unemployment • The Structural unemployment has been created by the mismatch in workers’ demographics along with the forms of jobs present. The jobs are present where workers did not have skills or when the workers are present but they have no jobs. The structural unemployment has been found in industries where there are technological advancements.

11. Cyclical unemployment • Cyclical unemployment has been created by fall in demand. The demand is not sufficient in economy. It is meant for services and goods. The businesses could not provide jobs. As per Keynesian economics, the cyclical unemployment has been natural outcome of a particular business cycle in recession.

12. Seasonal Unemployment Seasonal unemployment has been created by various industries or areas of labor market present in various seasons. For example, the unemployment moves up in winter months as there are agricultural jobs.

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