Unemployment, Inflation and Deflation Flashcards
What’s the three types of unemployment
Cyclical
Structural
Frictional
What’s a policy to resolve cyclical unemplyemnt
Expansionary Fiscal/ Monetary policy
What will Expansionary fiscal and monetary policy do to AD
Shift it to the right
Evaluation of Expansionary and fiscal policy
Conflict of objectives
Gov finances
Time lags
Consumer/business confidence
Policies to reduce real wage unemployment
Increase Min wages
Reduce strength of trade unions
NRU structural unemployment Interventionist SSPS
GS on education and training (SSPs)
Subsidies for in-work training
GS on infrastructure
Grants for houses
Evaluation of policies to reduce real wage unemployment
Impact on workers (competitive labour markets costs rising)
Income Inequality
NRU structural unemployment (Market based SSPs)
Reduce benefits
Deregulate Hiring/ Firing Laws
NRU Frictional unemployment- Interventionist SSPs
More and better resources for job centers
Subsidies for job agencies
GS on Infrastructure
NRU Frictional Unemployment- Market Based SSPs Advantages for the Gov
Reduce Benefits (encourage work and not welfare)
Evaluation of policies to reduce Unemployment (Overall)
Time Lags
Cost vs Benefits (Government Failure)
Stakeholder Impacts
No gurantee
Deflation
When interest rates are negative
Inflation
When the general prices in the economy are rising. Measured by CPI a basket of goods
Disinflation
When inflation is rising at a slower rate than the year before but still rising nonetheless.
What is Good Deflation Demand side or supply side?
Supply-side deflation (right shift in SRAS)
Demand side deflation is bad (Left shift in AD)
