What is the current state of the economy? • What is the inflation rate? Is infla
ID: 1250073 • Letter: W
Question
What is the current state of the economy?• What is the inflation rate? Is inflation a worry, or are we in a period of stable prices?
• What is the unemployment rate? Will a high unemployment rate cause deflation? What is the current structure of the labor market? How does the current structure affect the threat of cost push inflation or deflation?
• What is the growth rate of GDP? Can you find predictions on the future growth rate?
• What is the income distribution? How has this changed over recent history?
Explanation / Answer
the inflation rate is the rate of increase of the price index. It is the percentage rate of change of price levels over a period of time. Th higher the inflation rate the lower the pruchasing power of that currency. At the moment we are at an inflationr rate of 2.68%, therefore we can indicate that price levels are very stable. However inflation rate and unemployment rate are inversly related. This means that when there is a low infaltion rate there is a big unemployment rate. Our current unemployment rate is 9.2%. The unemployment rate is the rate out of the the whole labor force that are actively searching for jobs. Those who are not searchinf or are disabled are not counted as unemployed. You must know that not all people are included into the labor force since we are not all capable opf working for various reasons. In theory a high unemployment rate could cause deflation since when one goes up or down the other must do the opposite; however there are cases in which both go up this is called stagflation and this cuases total chaos in the economy. Hope this helps!!!! Please limit yourself to one question per post. Please put the rest of your question in a seperate question. Thanks a lot
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