Unemployment vs. Inflation Analytical Essay by Master Researcher

Unemployment vs. Inflation
An analysis of the link between unemployment and inflation.
# 36197 | 1,150 words | 10 sources | APA | 2002 | US
Published on Sep 24, 2003 in Economics (Inflation) , Economics (Labor)

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This paper supports the theory of the new age economy. The paper connects the lowering of the rate of unemployment to that of inflation and attributes both characteristics to the fiscal policy of the nation. The paper highlights the flaws in the assumption that the lower the unemployment rate, the higher the rate of inflation.

Description of the Issue
Analysis and Conclusion

From the Paper:

"Today is a time of extreme economic uncertainty, not just in America but also in the world beyond. In the United States, two things in particular lie entirely outside the range of recent historical precedent: Prices on Wall Street are much higher, and the rate of unemployment significantly lower, than economics textbooks say they have any right to be. To get monetary policy on target, the Fed needs to know whether the old economic rules have been stretched a little, and are ready to spring back in due course, or whether they have been torn apart for good and all. The Fed doesn't know because, for the time being, it cannot know--not for sure. One thing it ought to know, however, is that economic rules don't get torn apart very often.
"According to the old rules, the United States is poisedfor a burst of inflation. Why? Because according to the old rules, the strength of Wall Street is both a sign of excessive financial ease and (through its effect on wealth and spending) a cause of too much demand in the economy. The old rules say that when financial conditions are lax and demand is outrunning supply, inflation starts to rise."

Cite this Analytical Essay:

APA Format

Unemployment vs. Inflation (2003, September 24) Retrieved February 24, 2024, from https://www.academon.com/analytical-essay/unemployment-vs-inflation-36197/

MLA Format

"Unemployment vs. Inflation" 24 September 2003. Web. 24 February. 2024. <https://www.academon.com/analytical-essay/unemployment-vs-inflation-36197/>