Essay on Global Inflation and Unemployment - 1279 Words

Article summary This article by Andrew McCathie posted in EarthTimes and titled â€Å"European inflation climbs unemployment at 12-year high was posted on Friday July 30 2010. The article reports that food and energy costs have played a critical role in driving up inflation in the 16-member eurozone. The rates of unemployment remained stagnant to its highest level during this time. Introduction The recent global financial crisis that affected not only America but also Europe and other parts of the world resulted in massive unemployment. This is due to the high costs of operation that many corporations faced forcing them to cut on labor costs. There is need for European government interventions to avert this social crisis and prevent†¦show more content†¦This value is of much significance to investors as it has an effect in inflation rates (Cencini, 2008). The global financial crisis has had multiple effects in different industries in different countries. Analysis Consumer price index This is the overall cost of goods and services that are bought by an average consumer. This index is used in measuring the cost of living over a given period of time. When there is a rise in consumer price index, a typical family has to spend more money in order to maintain their standard of living. Inflation is a term that is used to describe a situation where the overall price level of an economy is rising (Mankiw, 2008). Inflation From the above graph, it can be seen that since July 2009, the consumer price index has always been increasing in Europe. This increase in consumer price index has been pushing inflation higher and higher. This has resulted in decreased profitability of most European corporations thus cutting down on costs by retrenching some staff hence causing unemployment. If this is not checked, then there is a chance that this will be a vicious cycle that will occur throughout the years. When massive unemployment occurs, the average purchasing power of an economy reduces. This could have an effect of forcing corporations to increase prices of their goods and services in order to maintain profitability. The net effect of this is increase in consumer price index further driving theShow MoreRelatedThe Australian Government’s Implementation of the Economic Stimulus Plan746 Words   |  3 PagesInflation can be described as the sustained increase in the general level of prices over a given period of time, usually one year. Inflation can have negative effects on many of the key economic outcomes such as economic growth, exports, international competitiveness and income inequality. Inflation is measured in Australia by the Consumer Price Index (CPI); the CPI outlines the movement in the prices of a basket of goods and services that are weighted according to their importance for the averageRead MoreThe Global Financial Crisis Of 2007 / 081194 Words   |  5 Pagesh arnessed or blocked by the government. The Global Financial Crisis of 2007/08 also caused the Australian government to deal with its failure to reach its macroeconomic goals. The three domestic objectives of government Australia’s three macroeconomic goals are equally important in keeping stability in the economy. The three goals are low unemployment, price stability and economic growth. The government aims to reach full employment which is 5% unemployment as not all of the population wishes toRead MoreAustralia s Financial Stability With Inflation Under Control1548 Words   |  7 Pages1. Introduction Following two decades of constant growth, substantial employment, contained inflation, minimal public debt and a solid financial system as a result of years of structure and policy reforms, Australia today has one of the strongest and largest mixed market economy in the world. Since the early 1980s, successive governments have deregulated financial and labour markets and reduced trade barriers making Australia one of the Asia–Pacific’s wealthiest nations who has enjoyed more thanRead MoreUs Economy Essay973 Words   |  4 Pageseconomy has proven to be a power force among competing nations, as it is the largest and most important economy in the world. The domestic challenges in addition to the rapidly transforming global landscape have not withered the strength of the United States, as it represents approximately 20% of total global output. The U.S. economy maintains its powerhouse status through a plethora of characteristics, which includes access to abundant natural resources and a sophisticated physical infrastructureRead MoreBusiness Cycle1566 Words   |  7 Pagesmacroeconomics, business cycle played an important role to show what a national economy is going; therefore, this essay will define what business cycle is and its characterist ics. Besides, all of variables such as Real Gross Domestic Product (RGDP), inflation and unemployment rate and their behaviour in the business cycle will be also demonstrated in the second part. The final part of this essay will analyse and compare the situation of Australian economy and USA economy in period of 10 years since 1998 basedRead MoreUnemployment in Peru: An economic concern1207 Words   |  5 Pagesï » ¿ Unemployment in Peru: an Economic Concern AIU Online Abstract The Peruvian unemployment rate has started to decline in the past few years. The lowered unemployment rate connects to Peru’s economy and means it is on the mend. There are several relationships between the lowered unemployment rate and the economy that will be described. The data on this occurrence has a trend that shows it will continue to decrease. This will mean the economy will continue to improve.Read MoreAn Economic Comparison Between United Kingdom And The United States1692 Words   |  7 PagesAlso, the inflation rate is used, which is a continuos increase in the prices for goods and services in the consumer price index and it is measured yearly (Herr Kazandziska, 2011: 74). Lastly, the unemployment rate shows the percentage of people whiling and could work but do not have a job (Macdonald, 1999: 238). This report will compare the economic growth performance of the United States and the United Kingdom since 1990 using four indicators: economic growth rate, GDP, inf lation, and unemploymentRead MoreWorld Economics and History1245 Words   |  5 Pages Journal Question 1 Building on the Okuns law, which basically describes a vibrant relationship that exist between national output and unemployment within which a fall unemployment results into higher national output, A. W. Phillips extended to discover the relationship between inflation and unemployment. The string of the basic ideas which revolve around this belief follows that as more individuals work then the national output rises, causing an increase in the wages, a situation that makes theRead MoreShould Feds Continue with Expansionary Monetary Policy or Exit Strategy?863 Words   |  4 PagesOver the past few years, the Fed had been trying to heal the economy from the recession by lowering the interest rate near zero in order to raise the inflation, increasing the price of housing and household wealth. This will encourage more people to buy products or services, causing an increase in consumers spending. Based on the data given by the U.S. Department of Commerce today, the economy is now healing from the recession with the expansionary monetary policy. However, some people argue thatRead MoreInterest Rates And Monetary Policy1712 Words   |  7 Pageswhich large amounts of investments are put into the real-estate and stock markets. In developed economies, interest-rate adjustments are vital in keeping inflation within a target range in order to protect economic activities or to cap the interest rate with economic growth to safeguard economic state. Current interest rates throughout the global economy vary from country to country. For example the United States interest rate is currently at .5% which is relatively low for the US, who historically