Inflation and Unemployment Essay

Recently, the United States of the States has been bombarded with a great financial crisis. numerous companies resulted to bankruptcy forcing the owners to close their businesses. Other companies had lay-off round workers to lessen the operating be of their business. a couple of(prenominal) other companies resulted to cutting the employees benefits to eliminate laying-off and closure. Workers earning be start marginal income resigned from their telephone circuit in the hope that they could find a nonher business organization which pays better.Among these responses, the most notcapable problem is the attach in the treasure of unemployment. In a report from chest of drawers of persistence Statistics (2009) among the 2,309 commonwealth in Iowa only 1,602 are sedulous while 62 are idle in 2007. In 2008, from 2,325 members of the population, 1,607 are assiduous while 69 are wild. bar the employment-population ratio of Iowa residents aged 16 long time and above, the send of unemployment was at 69. 4 portion in 2007 and 69. 1 go badage in 2008 (U. S. Bureau of Labor Statistics, 2009).Meanwhile, the U. S. Bureau of Labor Statistics (2009) reported that the unemployment rate in Waterloo-Cedar falls Metropolitan Area rose at 8 percent in February 2009 whereas the jobless rate was recorded at 4. 9 percent. This is relatively high as compared to unemployment rate in 2008 which was at 3. 9 percent and in 2007 which was at 3. 7 percent (U. S. Bureau of Labor Statistics, 2009). State pomposity has been identified as one of the major factors that contributed to the increased snatch of the unemployed.Inflation refers to a process in which the average take of prices increases at a substantial rate over a considerable power point of time (Grolier Encyclopedia, 1995, 150). This implies that more money is indispensable to buy a certain mensuration of overlaps and go. In Keynesian term, the relationship of inflation and unemployment has been describ ed as Wage costs are among the costs that rise in response to higher(prenominal) pries. When unemployment is low, employees can onetime(a) out for full compensation for the higher prices, and raises above that.When unemployment is high, however, the employees will have to lenify for less, and so costs do not rise as fast as prices when unemployment is high. (cited in Inflation and Unemployment). Adopting this term in the case of Waterloo-Cedar travel, the high price of goods and serve lead to increase in the number of unemployment since the companies are forced to cut discomfit their human resources to adapt to the increasing prices of goods and run that caused high costs in production. at that place are also times in Waterloo-Cedar Falls when high unemployment caused high inflation tho the production cost did not increase as fast as the prices.In this situation, high employment is caused by low labor wage. Since the wage is low, the crave for product and services is also low forcing the companies to increase their prices in order to equilibrize for the low demand of products and services. Analyzing the relationship betwixt inflation and unemployment the following factors are verbalise to contribute to the increase or come down of the ii variables wage as part of production costs, level of demands and generate, and cost of goods and services.Depending on the movement or behavior of these factors, the level of inflation or unemployment will any increase or decrease. Yet, it does not forever follow that when unemployment is high inflation is also high or vice versa. thither are other instances when unemployment is low yet the level of inflation is high or vice versa. Again the increase or decrease in level of the two variables depends on the above mentioned contributing factors. The Waterloo-Cedar Falls, however, seek to address the problems of inflation and unemployment by creating job opportunities for its residents.As expressed by give cha se Seymour, Cedar Falls conjunction services manager and economic development director, in an interview by Jim Offner (2009) Obviously, were not immune to whats going on nationally, but were pleased that weve been able to see some expansion and new-project pursuance in Cedar Falls sound now. The university obviously keeps us on an redden keel, and I think our business community has learned to be more diversify and in a better linear perspective to weather these down times. Projects like direct Corp.s new perishables distribution store and retail developments in Cedar Falls also are helping the metropolis withstand national trends. (cited in Offner, 2009). This resultant role however is applicable only for a short period of time. To really work out the problem of inflation and unemployment, Waterloo-Cedar Falls should down a demand managing policy wherein the presidential term and private sectors will be compulsory to learn how to manage demands in supply (both of labor and product materials) and demands in product and services according to economic situation.such(prenominal) management is needed so that the batch of Waterloo-Cedar Falls will be apt to expect the worst consequences of increase or decrease level of inflation and unemployment. References Grolier Encyclopedia. (1995). Inflation. In U. S. Grolier Encyclopedia of Knowledge 10, 150. USA Grolier Incorporated. Mc Cain R. A. 2009. Inflation and Unemployment. Retrieved April 24, 2009 from http//william-king. www. drexel. edu/top/prin/txt/AS/where1. hypertext mark-up language Offner, J. (2009). Local jobless rate among beat out in state.Retrived April 24, 2009 from http//www. wcfcourier. com/articles/2009/03/11/news/breaking_news/doc49b7a3bf91f75482515049. txt U. S. Bureau of Labor Statistics. (2009a). Over-the-year change in unemployment rates for Metropolitan Areas Monthly rankings, not seasonally adjusted. Retrieved April 24, 2009 from http//www. bls. gov/web/laummtch. htm. U. S. Burea u of Labor Statistics. (2009b). regional state and unemployment, 2008 annual averages. Retrieved April 24, 2009 from www. bls. gov/news. release/pdf/srgune. pdf.