eval inflation and employment

Question 1

Structural employment?

Answer 1

Lower unemployment does not have to be accompanied by higher inflation the reduction in unemployment comes from reducing structural unemployment, so reducing the natural rate. Indeed reducing structural unemployment involves an increase in labour mobility which has a variety of beneficial impacts including not just reducing the natural rate, but boosting teh capacity of the economy and making control of inflation easier

Question 2

Frictional unemployment?

Answer 2

Lower unemployment does not have to be accompanied by higher inflation if it is achieved through a reduction of frictional unemployment, for example through improved provision of information which helps job seekers to find work and helps firms too fill vacancies.

Question 3

Trade unions eval?

Answer 3

Lower unemployment does not have to be accompanied by higher inflation if it is achieved by reducing classical unemployment, for example by removing minimum wages or union power. Lower wages help to control inflation and would lead to an extension of labour demand and lower unemployment although removing worker protections will probably not be seen as desirable.