The Relationship Between The Rate Of Inflation And

2568 words - 10 pages

The Relationship between Inflation and the Unemployment Rate Inflation is when there is a constant rise in the general level of prices, within the economy. This can sometimes be seen as devaluing the worth of the currency. Although inflation is constant, it is however very irregular and does not rise to an alarming rate very often.There are numerous causes of inflation, however the highly popular reason maybe be caused by the demand-pull inflation, this is caused by the continued rise in aggregate demand (total amount of spending in the economy) exceeds the aggregate supply at current prices.Some firms will deal with this situation by raising their prices and by increasing their output. Depending upon how much their costs have been raised as result of increasing their output, will also determine how much their prices will be raised.In addition, cost-push is another cause of inflation; this is when the costs of production are constantly increasing, despite the level of aggregate demand. This will result in firms raising their prises, or by passing their costs onto the consumer and also by reducing their production.By restricting demand in order to control inflation, has costs this is by either control of the money supply or by cuts in the government spending However, if wages are increasing rapidly and the government attempts to bring demand into the economy, unemployment may be the result of their actions. ?Unemployment is when those who are of working age are willing and able to work for a rate of pay, however are unable to find such means of employment?. (Sloman and Sutcliffe) This is because employers will be unable to pay their staff because they cannot raise their sale prices, due to low demand. The wages would be high, as well as sale prices, although the demand is low, which will result in businesses going bankrupt or by sacking their employees.Therefore, by allowing higher demand, inflation will occur, however unemployment will be lower than normal, and vice versa. The Philips Curve shows that when demand-pull inflation is at a low, then the demand-deficient unemployment rate is at a high. AW.H.Philips also discovered the more change in the wages and inflation, the lower the rate of unemployment (demand-deficient) became, and this was known as the ?Philips Curve?. From looking at the graph in appendices 1, this shows that A.W.H.Philips theory was correct, as the higher inflation rises, the lower unemployment falls.John Maynard Keynes on the other hand believed that there was an exchange between inflation and unemployment and also that the Philips curves was far too simple and that other factors had to be taken into account..However, from 1997 the theory of the ?Philips Curve? does not relate to how the economy is performing, as both inflation and unemployment are are kept at a considerably low rate. This is due to the fact that Tony Blair had given the responsibility to control to interest rates to the Bank of England. This was in order...

Find Another Essay On The Relationship Between The Rate Of Inflation And

Sociological Perspective of the Relationship Between Education and the Economy

1590 words - 6 pages Sociological Perspective of the Relationship Between Education and the Economy There seems to be a direct link to what goes on in schools and what takes place at work. The functionalist approach to education and economy is that through socialisation education helps maintain society by introducing young people into values and beliefs such as achievement. They argue that education teaches what is needed within the world

The Relationship Between Sexual Taxonomies and Ideas of the Self

1920 words - 8 pages The relationship between sexual taxonomies and ideas of the self (e.g. Foucault, Jagose or Halperin) Sexual Taxonomies are not trans-historical; they are socially and historically situated and created. Sexual taxonomies are the different ideas about what sexuality is and they circulate around contexts, consequently forming identities. When we categorise sexuality it is categorised into heterosexual people and homosexual people but it is

The Relationship between Height and Weight of Boys and Girls

1466 words - 6 pages The Relationship between Height and Weight of Boys and Girls Recently due to the media and the government the weight of children has been discussed. It is believed that children are now becoming obese and are now more overweight than children in the past. This had led to public becoming worried about the health of the future generation because there is currently an increase in the number of coronary heart diseases

The RBA and inflation targeting

571 words - 2 pages The RBA claims that inflation targeting is consistent with its obligation to 'secure full-employment'? Why? What are the problems with this argumentInflation targeting is the conduct of monetary policy to achieve a given inflation rate over time. The RBA has an inflation target between 2-3%; this allows the RBA to balance the tradeoffs between inflation and employment. In order to maintain this inflation target the RBA must try to keep aggregate

Islamic understanding of the relationship between GOD and Humanity

1583 words - 6 pages The translation of Islam is 'submission' and this is the meaning of the religion to Muslims. Muslims believe that their lives must be in complete obedience to God and that they should always strive to please God. It is this principle that is the basis of the Islamic relationship between humanity and God.The effort made by Muslims to be obedient to God throughout their lifetimes is a struggle. Muslims are fighting a constant battle to submit

Relationship Between the Materiality of a City and Its Security

2004 words - 8 pages To answer the question posed above, I will first consider what constitutes the materiality of the city, then I will consider security in the context of the city. Finally, I will then the relationship between the materiality of the city and its security. What constitutes the materiality of a city? The materiality of a city is the personification of that city, or urban environment through the physical objects that serve to make up the component

The relationship of trade between Australia and Singapore

1255 words - 5 pages The development of trade between the two countriesAustralia and Singapore have maintained a trade relationship for a long time now. Both countries belonged to the British Empire. Singapore and Australia are both members of APEC (Asia pacific economic cooperation) and the world trade organization (WTO). Their trade relationship resulted in the Singapore and Australia free trade agreement (SAFTA) in 2003.The republic of Singapore has long been a

Marx's Account of the Relationship Between Technological and Political Change

1624 words - 6 pages Marx's Account of the Relationship Between Technological and Political Change "The windmill will give you a society with the feudal lord, the steam mill a society with the industrial capitalist.[1]" This quote, from Marx’s Poverty of Philosophy, shows us that there is a link in Marx’s writing between technological change, or the methods of production, and political change, or the structure of society. One of the most

Willy Russell's Presentation of the Relationship Between Frank and Rita

1737 words - 7 pages Willy Russell's Presentation of the Relationship Between Frank and Rita At the start of the play, Frank and Rita can be seen as opposites; Frank is a middle aged male academic, while Rita is a young, female hairdresser. Any relationship between the two seems unlikely, but they warm to each quickly and the audience realises that Frank and Rita are not quite as different to one another as first appearances show. They are

The relationship between language and thought, and assess one explanation of the relationship between language and thought

610 words - 2 pages ), it suggested that language differences affect processing in certain tasks e.g.: memory tasks.The language in one country also differs from another country, and these differences can be related to different ways of thinking e.g.: the English language makes a clear distinctions between the past, present and future tense compared to Hopi (native Americans) who have no distinction between time related sense.Whorf's work has been very influential

Investigating The Factors Which Affect The Rate of Reaction Between Limestone and Acid Rain(Hydrochloric Acid)

6933 words - 28 pages 100 and 150 seconds. To find this I needed to work out the gradients of the 1M, 1.25M, 1.5M, 1.75M, 2M lines, between 100 and 150 seconds.1M = 14.5/20 = 0.29 rate of reaction1.25M = 19/20 = 0.381.5M = 26/50 = 0.521.75M = 31/50 = 0.622M = 36.5/50 = 0.73Concentration (M) Rate of Reaction at 100-150 seconds1 0.291.25 0.381.5 0.521.75 0.622 0.73

Similar Essays

How Do Interest Rates Influence The Rate Of Inflation

1594 words - 6 pages Inflation is a sustained increase in the general price level (and a fall in the real purchasing power of money). The rate of inflation is normally measured by a consumer price index, such as the Retail Price Index in the UK (which measures the annualised rate of change in prices over the preceding year). The Monetary Policy Committee of the Bank of England meets each month to set the official base rate of interest for the economy, with the aim

The Rate Of Reaction Between Marble Chips And Hydrochloric Acid.

1396 words - 6 pages have the largest surface area and should therefore have the quickest rate of reaction.The reaction between the 2.0M hydrochloric acid and the small marble chips was too quick. Within 30 seconds over 100 cm3 of CO2 was produced. This meant that a second preliminary experiment had to take place. This time we used the same amount of marble chips and hydrochloric acid but instead using a concentration of 1.0M. I diluted the acid by adding 20ml of

Inflation And The Economy Essay

7838 words - 31 pages parity between paper and gold. This would cause unemployment now, as it has in the past, when the exclusive and forced currency system is retained and private sound issues remain suppressed, It would lead to the unemployment caused by falling prices as discussed under I/6. 4. Another faulty approach to "stopping" inflation would be the replacement of the existing currency at an arbitrary rate (not the market rate) by another state

The Meaning Of Inflation Essay

1549 words - 6 pages The Meaning of Inflation There are four macroeconomic policy objectives that a government pursues: high and stable economic growth, low unemployment, low inflation, the avoidance of balance of payments deficits and excessive exchange rate fluctuations. Some of these policy objectives may conflict with each other depending on the priorities of the government. A policy designed to accelerate the rate of economic