unemployment

Unemployment and Inflation in UK

Unemployment and Inflation in UK

Readers Question: how the unemployment and inflation is related to country’s economy If we take the example of the UK, we can see differing examples of how unemployment and inflation are related to a country’s economy. The key to this question is what causes unemployment and inflation. There are several different factors, but it is important to consider both demand side and supply side factors. Unemployment and Economic Growth. The most obvious factor is that higher economic growth will reduce unemployment. Since 1992, the UK has experienced a long period of…

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The Importance of Full Employment and Low Inflation

A quick look at the difference between UK and US Monetary Policy, in particular, which is the most important objective to target. This dilemna is important because the UK could be experiencing inflation and lower growth, therefore, the MPC may be tempted to keep interest rates too high in order to target low inflation. By contrast the Fed have an objective of both inflation and full employment. The Fed have cut interest rates very significantly in recent weeks. Should Low inflation be the Most important objective for Government? Previous Essays on…

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(a)What are the causes/consequences of unemployment? The causes of Unemployment are either Demand Side or Supply Side. (most issues in Economics are due to demand and supply) Demand side or (Demand deficient unemployment) cccurs in a recession or period of low growth. Because firms produce less they  need less workers. If the US goes into recession you can expect to see unemployment rise quite sharply. Supply side unemployment can be due to: Frictional Unemployment (people looking for work) Structural unemployment (mismatch of skills, geographical immobilities e.t.c) Real Wage Unemployment (wages above the equilibrium) Inflexible Labour…

UK Unemployment in 2007 lowest for 22 years

UK Unemployment in 2007 lowest for 22 years

Amidst all the gloom surrounding global credit markets and house prices, it is easy to forget some of the strengths and developments in the UK economy. One of the most remarkable features of the UK economy is the sustained reduction in unemployment. Falling from a peak of 3 million in 1992, the official method of unemployment is now only 813,000 – a level not seen since April 1975. Despite the fall in unemployment wage settlements remain fairly muted, with average pay claims…

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The Role of Aggregate Demand in Reducing unemployment

Evaluate the importance of managing aggregate demand (AD) to bring about a sustained reduction in the rate of unemployment in the UK economy. In 1992 Unemployment in the UK rose to 3 million. A significant part of this unemployment this was due to the recession of 1992. In a recession, demand deficient unemployment will increase. This is because as firms close down they have to lay off workers. Other firms, may stay in business by not hiring new workers or laying off…