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Understanding Inflation and Unemployment

The document discusses inflation and unemployment. It defines inflation as a sustained rise in general price levels and explains how to calculate inflation rates using consumer price indices. It distinguishes between demand-pull and cost-push inflation. Causes and remedies of inflation are provided. Unemployment is defined as workers able and willing to work being unemployed. Types of unemployment including frictional, structural, cyclical, and seasonal unemployment are explained. Causes and remedies of unemployment are also outlined.

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Faiza Rajpoot
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93 views24 pages

Understanding Inflation and Unemployment

The document discusses inflation and unemployment. It defines inflation as a sustained rise in general price levels and explains how to calculate inflation rates using consumer price indices. It distinguishes between demand-pull and cost-push inflation. Causes and remedies of inflation are provided. Unemployment is defined as workers able and willing to work being unemployed. Types of unemployment including frictional, structural, cyclical, and seasonal unemployment are explained. Causes and remedies of unemployment are also outlined.

Uploaded by

Faiza Rajpoot
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

FAIZA TANVEER

MAHNOOR KHALID
SAAD KHAWAJA
AHMED
ZEESHAN
Inflation and unemployment are the two most
talked-about words in the contemporary
society.
These two are the big problems that plague all
the economies.
Inflation may be defined as ‘a
sustained upward trend in the
general level of prices’ and not
the price of only one or two
goods.
G. Ackley defined inflation as ‘a persistent
and appreciable rise in the general level
or average of prices’.
 Let’smeasure inflation rate. Suppose, in
December 2007, the consumer price index
was 193.6 and, in December 2008, it was
223.8. Thus, the inflation rate during the last
one year was
 223.8- 193.6/ 193.6 x 100 = 15.6
Demand pull inflation
Cost push inflation
 Thedemand for goods or products increase
and production does not rise as fast

 Thisexcess demand results in prices being


pulled up
 This
demand pull inflation occurs when total
demand exceeds the total supply.

 Thistype of inflation happens when there is


an inflationary gap
 The cost push inflation is caused by increase
in the cost of production

 Asa result increased costs push up the price


level
 Population explosion

 Political instability

 Imported goods

 Increase in wages and salaries

 Climatic factors
 Oil prices

 Corruption

 Slow industrial growth

 Slow agricultural growth


 Increase the supply of essential items

 Control deficit financing

 Reduce public borrowing

 Explore new resources

 Population control
Unemployment refers to a situation in which
the workers having the ability to work and
willing to work are not employed or do not
get employment.
 Frictional unemployment

 Structural unemployment

 Cyclical unemployment

 Seasonal unemployment
Frictional unemployment occurs when a person
moves from one job to another. it is because
of the imperfect information in the labor
market.
 Structuralunemployment occurs when the
qualification of a person is not enough to
meet his/her job responsibilities, conversely
structural unemployment arises when the
wages paid fall short to the minimum wage
that should be paid for a concerned job.
cyclical unemployment occurs when the
economy is in need of low work force the
demand for labor increases when economy is
in growth however when it passes through
depression it again releases the unwanted
labor as unemployed labor force
It occurs when an occupation is not in demand
at certain seasons.
The unemployment rate is expressed in
percentage and is calculated as follows
 High population growth

 Absence of employment opportunities

 Seasonal employment

 Slow development of industries

 Insufficient economic progress


A change in investment pattern

 Encouragement to small enterprises

 Problem of choice of technique

 Encouragement of new growth centers

 Reorientation of educational policy

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