Theme 13. Unemployment and inflation are both manifestations of economic instability

1. Theme 13. Unemployment and inflation are both manifestations of economic instability

2. 1. Essence and basic forms of unemployment

3.

Unemployment - a condition in which
the willing can not find work at the
regular rate of wages.
Unemployment rate - the percentage
of the unemployed to the labor force,
which does not include: students,
pensioners, prisoners, and boys and girls
up to 16 years.
The overall unemployment rate - the
percentage of the unemployed to the
total labor force, including those
engaged in active military service.

4.

The types of unemployment
Frictional
unemployment
- unemployment
associated with
short period
required to
search for a new
job in
connection with
education,
output from
maternity leave,
relocation.
Fluid (Cyclical)
unemployment
- the difference
between the
unemployment
rate at this time
of the industrial
cycle and the
natural rate of
unemployment.
Hidden
unemployment
covered by the
Long-term
main part of
unemployment
rural residents, includes people
and also ruin whose activity is
the small
highly irregular.
producers and
traders.
The most recent
form of a
reduction of
employment is
technological
unemployment
associated with
the introduction
of poorly
populated and
deserted
technologies
based on
electronics.
Structural
unemployment
unemployment
associated with
the period of
job search those
employees
whose specialty
or qualification
does not allow
them to find the
right job.

5.

Employment rate - the percentage of the adult
population employed that are not on welfare, in
shelters, nursing homes, etc.
Full employment does not mean complete absence
of unemployment.
Natural rate of unemployment - a set of frictional
and
structural
unemployment
and
the
unemployment rate is associated with a stable
economy, when the real national product is at the
natural rate, and lacks both slowing and accelerating
inflation or when the expected rate of inflation is
equal to the actual level of inflation.

6. In modern conditions, employment status based on the following principles:

• freely chosen employment - everyone has the right to freely
dispose of their abilities to work
• Productive employment - activities related to meeting the
personal and social needs and bringing them to earnings
• Legislative regulation of employment, measures to promote
employment and social protection against unemployment
• Full-time - the right to work and to protection against
unemployment

7. 2.The effect of unemployment rate on the value of GNP. The Law of Oaken

8.

In cyclical unemployment production capacity is not
fully utilized and the amount of GDP less than that which
would be at full employment. The difference between
potential output at full employment GDP and actually
achieved in cyclical unemployment GDP is GDP gap.
The Law of Oaken expresses the relationship between
the level of unemployment or lost in GDP. If the actual
unemployment rate exceeds the natural rate of 1%, the
gap in GDP of approximately 2.5%. This ratio (1:2.5)
allows us to calculate the absolute loss associated with
any level of unemployment.

9. The main method of the state employment policy are the programs for the reduction of unemployment.

Stimulating employment growth
Increase the number of jobs in the
public sector
Training and retraining
Promoting the employment of
labor

10. The labor exchanges, which are:

Registered unemployed, if these persons meet the established legal
status of "unemployed"
Make records and registered vacancies in enterprises of different
ownership forms
Employment opportunities for job seekers
Carry out the payment of unemployment benefits
Study labor demand and supply
Provide information on employment for everyone

11. 3.Inflation and its causes

12.

The essence of inflation is that the national
currency depreciates in relation to goods, services
and foreign currency, preserving the stability of its
purchasing power.

13. The types of inflation

• Inflation can occur sparingly be creeping, in which prices do not increase by more than
10% per year.
• Galloping inflation, which is characterized by the rise in prices of 20% to 200% a year, is
already a serious stress on the economy, although the prices are not difficult to predict
and include options transactions and contracts.
• The most disastrous for the economy hyperinflation, which is astronomical growth of
currency in circulation and, as a consequence, a catastrophic rise in commodity prices.
• When balanced with respect to inflation, prices rise moderately, while for most goods
and services.
• In the case of unbalanced inflation rates for various goods and services are rising at
different times and in different ways for each type of product.

14. The types of inflation

• Expected inflation can be predicted for any period of time, and
it is often a direct result of government action.
• Unexpected inflation is characterized by a sudden jump in
prices, which adversely affects the taxation system and the
money, if there is a population of inflation expectations.
• Demand pull - the imbalance between supply and demand on
the demand side.
• Cost inflation - rising prices due to increased production costs.