Inflation and Unemployment Essay

Recently, the United States of America has been bombarded with a bully financial crisis. Many companies resulted to bankruptcy forcing the owners to closing their businesses. Other companies had lay-off close to workers to lessen the ope count be of their business. Few unseasoned(prenominal) companies resulted to slap-up the employees benefits to avoid laying-off and closure. Workers earning below borderline income resigned from their job in the hope that they could get hold another job which pays better.Among these responses, the most historied problem is the increment in the appraise of unemployment. In a report from pectus of savvy movement Statistics (2009) among the 2,309 population in Iowa alone 1,602 are employed while 62 are jobless 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 hoary 16 years and supra, the rate of unemployment was at 69. 4 per c entum in 2007 and 69. 1 percent in 2008 (U. S. place of grind Statistics, 2009).Meanwhile, the U. S. Bureau of Labor Statistics (2009) reported that the unemployment rate in Waterloo- cedar fall Metropolitan field of force rose at 8 percent in February 2009 whereas the jobless rate was preserve at 4. 9 percent. This is relatively advanced 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 tote up of the unemployed. pomposity refers to a process in which the average take aim of prices increases at a substantial rate over a considerable item of time (Grolier Encyclopedia, 1995, 150). This implies that more than money is mandatory to buy a certain amount of crossroads and function. In Keynesian term, the relationship of ostentation and unemployment has been described as Wage be a re among the cost that rise in response to eminent pries. When unemployment is low, employees can old out for unspoiled compensation for the superiorer prices, and raises above that.When unemployment is mettlesome, however, the employees leave behind have to settle for less, and so costs do not rise as fast as prices when unemployment is senior high school. (cited in Inflation and Unemployment). Adopting this term in the case of Waterloo-Cedar Falls, the high price of goods and services lead to increase in the number of unemployment since the companies are coerce to cut shine their human resources to conciliate to the increasing prices of goods and services that caused high costs in deed. There are withal times in Waterloo-Cedar Falls when high unemployment caused high ostentatiousness yet the production cost did not increase as fast as the prices.In this situation, high employment is caused by low labor salary. Since the wage is low, the lead for product and services is also low forcing the companies to increase their prices in order to compensate for the low penury of products and services. Analyzing the relationship between inflation and unemployment the by-line factors are said to contribute to the increase or decrease of the two variables wage as part of production costs, level of demands and supply, and cost of goods and services.Depending on the movement or behavior of these factors, the level of inflation or unemployment go forth 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. over again the increase or decrease in level of the two variables depends on the above mentioned contributing factors. The Waterloo-Cedar Falls, however, tried to address the problems of inflation and unemployment by creating job opportunities for its residents.As expressed by Bob S eymour, Cedar Falls community services wipe outr and scotch development director, in an interview by Jim Offner (2009) Obviously, were not immune to whats going on fieldly, but were pleased 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 entail our business community has learned to be more diversified and in a better position to weather these down times. Projects like Target Corp.s new perishables distribution warehouse and retail developments in Cedar Falls also are helping the city withstand national trends. (cited in Offner, 2009). This solution however is relevant 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 depart be required to learn how to manage demands in supply (both of labor and product materials) and demands in pr oduct and services jibe to economic situation.Such management is needed so that the people of Waterloo-Cedar Falls will be trained to expect the finish up consequences of increase or decrease level of inflation and unemployment. References Grolier Encyclopedia. (1995). Inflation. In U. S. Grolier Encyclopedia of acquaintance 10, 150. USA Grolier Incorporated. Mc Cain R. A. 2009. Inflation and Unemployment. Retrieved April 24, 2009 from http//william-king. www. drexel. edu/ concealment/prin/txt/AS/where1. html Offner, J. (2009). Local jobless rates among best 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 flip-flop 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 unemplo yment, 2008 one-year averages. Retrieved April 24, 2009 from www. bls. gov/news. release/pdf/srgune. pdf.