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Unemployment and InflationTwo of the biggest issues in macroeconomics are inflation and unemployment. Policymakers would like to keep both of these measures low. Often, however, there is a tradeofbetween the two. A strong economy that lowers unemployment can put upward pressure on prices. A weak economy that lowers inflation can increase unemployment.We currently have the benefit of both very low unemployment and inflation. But things could change and it’s good to have policy plans in place before either of these problemsgets too bad.Imagine that you are in charge of macroeconomic policy. Answer these questions, being sure to explain your answers.What are some of the problems, difficulties, or hardships caused by unemployment?What are some of the problems, difficulties, or hardships caused by inflation?If you had to make a choice today between a policy that would head ofincreases in inflation or increases in unemployment, which one would you choose?Continue the conversation with your classmates:Reply to a classmate and share your opinion about his or her decision.For more information, see my video on Unemployment and Inflation:If you had to make a choice today between a policy that would head off increases in inflation or increases in unemployment, which one would you choose?I think I would choose to keep inflation from increasing at a rapid rate, if there could be a policy to raise inflation slowly, and warn consumers, then there would be less damaging efects to the consumers. Everyone would have an opportunity to prepare their finances ahead of time. Unemployment will never not happen, that is why I chose inflation.Hi Professor & Class, There are a lot of problems caused by unemployment. Financial hardship, poverty, debt, homelessness, arguments amongst families, stress, tension, and increased crime. Unemployment concerns have been a float since the 1930’s. The loss of incomeresults in less consumption and a lower living standard. When it comes to the economy,it is an increasing concern as technology continues to grow and the economic picture asa whole continue to change and grow. Unemployment cause so much stress that it has been rumored to cause major depression in some individuals.
Some issues caused by inflation are the encouragement of spending rather than investing, raises the cost of borrowing or taking out loans, causes uncertainty, and creates less confidence in the economic market. Money is not as valuable when inflation takes place. I think if I had to choose, I would choose to try and lower the unemployment rate. Inflation is bad but I feel like sometimes it’s the inevitable. Unemployment causes so many personal, financial, economic, social issues. If there was a way to control unemployment, then that would be ideal as it would improve the economy tremendously.