FOR THE DECADE OF 1950\'s: 1. Analyze unemployment and inflation data as to thei
ID: 1131616 • Letter: F
Question
FOR THE DECADE OF 1950's:
1. Analyze unemployment and inflation data as to their relation to output and growth, using macroeconomic principles and models to explain their effect. Explain how inflation and unemployment are calculated for the data presented (see charts below). Then, discuss how changes in both are related to changes in GDP growth. (I gathered these charts from https://fred.stlouisfed.org/categories/22 , set from January 1st 1950 - December 30th 1959)
2. Apply specific models developed throughout the course to demonstrate how the events of the baby boom/suburbs boom and the recessions in 1954 and 1958 influenced both unemployment and inflation during this time period. Discuss how the events impacted both economic indicators.
Civilian Unemployment Rate 140 120 100 80 60 40 6 20 20 40 60 1951 1952 1953 1954 1955 1956 1957 1958 959Explanation / Answer
1). A country gaining a good GDP(Gross Domestic Product) means all sides of corners of the country is improved well as per the economic scenario. If the countries economic position is great in the sense the employment, consumer spending on goods and services and purchasing power parity happening in a wide range OR going well.
Suppose the countries economical position is so bad OR reducing the economic stability means the unemployment and inflation problem is rising day by day in the respective country. If the prices are raising for essential goods OR necessary of food grains then ultimately the negative impacts showing on employment. So, the companies will remove the employees from their organization and as well as factories also remove the workers from their factories in order to reduce OR reduce the cost control.
If this kind of situation arose then the government of the respective country will face the severe circumstances by economical wise. The countries economical value reduced in a home and International market. The public will unable to buy the essential goods with a high price and the other side the unemployment problem will enhance day by day. So, ultimately the GDP of the respective country will fall down and creating a negative impact on the international market.
2). As per the given question, in 1954 and 1958 the recession is creeping badly in the country then it leads to unemployment and inflation. If the recession happens in any country then the immediate impact will show on employment. Suppose the employment had 90% in the country before recession later it changes the face of employment to 30%. So, the government is responsible to provide the basic necessary things for all eligible poor persons. If the government is also failed to provide for the poor public and also they failed to give employment to the persons then it leads to famine in the respective country.
If we observe the tables then we can clearly come to know the unemployment and inflation of the years 1954 and 1958.
Let us see 1954:
The unemployment is increased to 140 % from -20% in 1953 and the inflation of the year is reached 1.8 % from the 0.7% in 1953.
Let us see 1958:
The unemployment is increased to 90 % from 3% in 1957 and the inflation of the year is reached 3.5% from the 2.5% in 1957.
If the recession is going beyond the boundaries then the government will need to control the prices so the bankings will slow down the circulation of money in the home and international market then the recession will come down a bit. Later, the banks will attract the customers for fixed or tenure deposits. So, the amount will be deposited in the banks then the circulation of money in outside is slowly coming down. Once the circulation of money in a home and international market has frozen then the prices of essential goods will come down. If the prices of essential goods were reduced then the recession will completely go away.
So, the government needs to control the circulation of money in the home and international market so the prices of essential goods will come down then it hits the recession and it also comes under the control.
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