Inflation and unemployment cannot co-exist in an economy?

eshal · #1 Sunday, June 20, 2010

senior members give ur opinion abt this...

inflation and unemployment cannot co-exist in an economy?? discuss

Raz · #2 Sunday, June 20, 2010

Are you sure you want to know the relation of inflation and unemployment?
Or
You have misunderstood it and proper question is: Zero Inflation and full employment/zero un-employment can't co-exist?

eshal · #3 Sunday, June 20, 2010

its written in book of economics by k k dewett....
i ve written it as it is...

Raz · #4 Sunday, June 20, 2010

Quote:

Originally Posted by eshal

its written in book of economics by k k dewett....
i ve written it as it is...

Try to understand Philip Curve which explains the relation of inflation and such concepts.

newstudent · #5 Monday, June 21, 2010

@Eshal

It is wrong that inflation and unemployment can't exist simultaneously. This is apparent in Pakistan as we see both of these phenomena. The existence of both problems is called stagflation. Stagflation derives its name from two concepts; inflation and unemployment (stagnation). Thus inflation and stagnation existence at the same time is referred to as stagflation.

The exact relation between the unemployment and inflation is negative i.e. if unemployment increases inflation will decrease and vice versa. The relation between these two variables is found by Philips, a British economist. This relation became very famous and is one of the cornerstones in the modern macroeconomics.

One word of caution; K.K. Dewet is not a standard economics book to follow. Try Abel and Bernanki (Macroeconomics) as this is easy one to follow.

Regards

mahmood · #6 Wednesday, June 23, 2010

inflation and unemployment can stay in an economy because of stagflation.

hina_a · #7 Monday, June 28, 2010

inflation and unemployment are two intricately linked concepts, there are two possible explanations of these concepts, one in the short run and another in the long run, in the short term the inverse relationship between inflation and unemployment does exist i.e when inflation is on the higher side unemployment is on the lower side and vice versa. if u see any short term Philips curve u can see this relationship as a declining curve.
In the long run however the economists had not find any significant relationship between the two, so if u see any long term Philips curve u will see a vertical line meaning that the it is not elastic.

habib kalyar · #8 Tuesday, June 29, 2010

the inflation is a general rise in price level .there are various kinds of inflation like demand pull , cost push , core inflation, nfne inflation, trimmed inflation , creeping inflation, walking inflation, running inflation, hyper inflation etc.
while unemployment is a situation where a person is willing to work , is able to work , and some times gets the job but not according to his capabilities is called unemployment.there are various types of unemployment also , like structural unemployment, cyclical , disguised or voluntary unemployment etc.

BOTH ARE COLLECTIVELY CALLED AS TWIN EVILS
when we try to control inflation , the unemployment increases and when we try to control unemployment the inflation rises.
REASON:
when inflation is to control ,there is reduction in price level, this reduction causes the reduction in profit so production decreases and when production decreases few workers are required than before.

Sheeraz S · #9 Thursday, August 19, 2010

Phillip Curve is utter ******** because there is no empirical evidence that suggest such trade-off between Inflation and Unemployment. We better bury the Keynesians now

anno · #10 Tuesday, December 07, 2010

IF NOMINAL GDP increases by 20% and GDP deflator decrease by 15%,what is real GDP?