Inflation and Unemployment Essay

Recently, the United States of America has been bombarded with a great(p) financial crisis. Many companies resulted to bankruptcy forcing the owners to close their businesses. Other companies had lay-off some workers to decrease the operating costs of their business. Few other companies resulted to cutting the employees benefits to forefend laying-off and closure. Workers earning be depleted marginal income resigned from their job in the hope that they could find a nonher(prenominal) job which pays better.Among these responses, the most nonable problem is the accession in the pass judgment of unemployment. In a report from sanction of Labor Statistics (2009) among the 2,309 population in Iowa only 1,602 be employed while 62 are light in 2007. In 2008, from 2,325 members of the population, 1,607 are employed while 69 are jobless. Measuring the employment-population ratio of Iowa residents aged 16 years and preceding(prenominal), the rate of unemployment was at 69. 4 percent i n 2007 and 69. 1 percent in 2008 (U. S. role of Labor Statistics, 2009).Meanwhile, the U. S. Bureau of Labor Statistics (2009) reported that the unemployment rate in Waterloo- cedarwood fall Metropolitan Area rose at 8 percent in February 2009 whereas the jobless rate was recorded at 4. 9 percent. This is relatively gritty 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 splashiness has been identified as one of the major factors that contributed to the appendd number of the unemployed. lump refers to a process in which the average take aim of prices increases at a substantial rate over a considerable period of period (Grolier Encyclopedia, 1995, 150). This implies that more money is needed to buy a certain measuring rod of products and services. In Keynesian term, the race of inflation and unemployment has been described as rent costs are among the costs that rise in r esponse to toweringer(prenominal) pries. When unemployment is humble, employees can old out for full compensation for the higher prices, and raises above that.When unemployment is high, however, the employees bequeath have to settle for less, and so costs do not rise as fast as prices when unemployment is high. (cited in ostentatiousness and Unemployment). Adopting this term in the case of Waterloo-Cedar move, the high price of goods and services lead to increase in the number of unemployment since the companies are forced to cut down their gay resources to adapt to the increasing prices of goods and services that caused high costs in deed. there are also times in Waterloo-Cedar Falls when high unemployment caused high inflation yet the production cost did not increase as fast as the prices.In this situation, high employment is caused by low comminute wage. Since the wage is low, the demand for product and services is also low forcing the companies to increase their prices in order to compensate for the low demand of products and services. Analyzing the relationship between inflation and unemployment the following factors are said to contribute to the increase or decrease of the two variables wage as part of production costs, take aim of demands and supply, and cost of goods and services.Depending on the movement or behavior of these factors, the train of inflation or unemployment will either increase or decrease. Yet, it does not always follow that when unemployment is high inflation is also high or vice versa. There 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 change factors. The Waterloo-Cedar Falls, however, tried to address the problems of inflation and unemployment by creating job opportunities for its residents.As verbalised by Bob Seymour, Cedar Falls community services conductor and economic develop ment director, in an interview by Jim Offner (2009) Obviously, were not immune to whats going on nationally, but were dexterous that weve been able to see some expansion and new-project interest in Cedar Falls right now. The university obviously keeps us on an even keel, and I think our business community has learned to be more change and in a better position to weather these down times. Projects wish well Target Corp.s new perishables distribution warehouse and retail developments in Cedar Falls also are helping the city stand fast national trends. (cited in Offner, 2009). This solution however is applicable only for a short period of time. To really solve the problem of inflation and unemployment, Waterloo-Cedar Falls should implement a demand managing policy wherein the government and private sectors will be required 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 managem ent is needed so that the people of Waterloo-Cedar Falls will be trained 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. html Offner, J. (2009). Local jobless rates among better(p) 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. Bureau of Labor Statistics. (2009b). Regional state and unemployment, 2008 annual averages. Retrieved April 24, 2009 from www. bls. gov/ne ws. release/pdf/srgune. pdf.