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Economics
The employment rate is the crucial aspect of any economy it determines the growth rate of the nation. When the employment opportunities increase the chances for the people to get the dream job also increases. However, there are numbers of factors that determine the opportunities level to introduce new jobs in the nation. America has shown an increase in employment level in the market which is a good sign for the citizen. There is a strong correlation between the inflation level and employment. Any country with high inflation faces different problems. It is because inflation has an adverse impact on the growth of the economy. It affects the exchange rate, cost of borrowing, prices, and overall economy of the country. Besides, inflation has negative over the growth of the economy however it leaves a positive impact on the employment level. In the article, the conditions of the employment level and the impact of inflation are being discussed. Whenever inflation increases in the country, the unemployment rate decreases and more people get opportunities to get new jobs.
The primary concept that has been discussed is the relationship between the inflation and employment level with the help of the Philips curve. These are the economic concept from the course and important to understand. Inflation leads to change in various economic factors that result in lowering the unemployment level. Philips curve is the curve that indicates the negative correlation between inflation and unemployment level ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"9MMS84CZ","properties":{"formattedCitation":"(Irwin)","plainCitation":"(Irwin)","noteIndex":0},"citationItems":[{"id":479,"uris":["http://zotero.org/users/local/rVaVAHaF/items/VZ93Q9Q8"],"uri":["http://zotero.org/users/local/rVaVAHaF/items/VZ93Q9Q8"],"itemData":{"id":479,"type":"article-newspaper","title":"Three Key Factors That Will Determine How Long the Hot Job Market Lasts","container-title":"The New York Times","section":"The Upshot","source":"NYTimes.com","abstract":"Where is this growth really coming from; how real is the concern over inflation; and how many more workers are out there?","URL":"https://www.nytimes.com/2018/11/02/upshot/the-job-market-is-firing-on-all-cylinders-three-questions-will-determine-how-long-it-can-last.html","ISSN":"0362-4331","language":"en-US","author":[{"family":"Irwin","given":"Neil"}],"issued":{"date-parts":[["2018",11,3]]},"accessed":{"date-parts":[["2019",4,10]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Irwin). For instance, whenever inflation increases it leads to decrease in unemployment level and when inflation rate decreases it result in the increase in the unemployment level. Economist and government always try to maintain or decrease the inflation rate because it has a negative impact on the economy. When inflation rate increases it results in an excessive amount of money in the hand of consumers. When consumers get more money to spend, they demand more goods and services. To control the high demand for goods and services producers, stakeholders either increase the price of the existing supply of goods or services or increase production. It is diffcut to increase the production level in short run therefore increase in the price becomes the easy way to control the supply and it increase the profit of the producers. With an increase in production, demand for more labor increases. In other words, producers get the opportunity to expand their production and provide more jobs. This is how inflation leads to an increase in the employment level.
The above graph indicates the relationship between unemployment and inflation with the help of the Phillips curve. At the point, The unemployment rate is 6% with only 2% of inflation. When inflation rises to five percent at point B, the unemployment rate decreased to only 3%. However, the author discussed that the Phillips curve does not seem to be operated in the real world but somehow it is working in the US economy as it had been developed. The reason behind the unrealistic framework of the Philips curve is that inflation not always hit the unemployment level; there are various factors that eliminate the impact of inflation from the unemployment level. For instance, when inflation leads to the increase in aggregate demand it results in an increase in real GDP. Therefore, the producer hires more labor to meet the aggregate demand by providing sufficient supply of the goods and services ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"zQagGJ2l","properties":{"formattedCitation":"(\\uc0\\u8220{}Phillips Curve - Economics Help\\uc0\\u8221{})","plainCitation":"(“Phillips Curve - Economics Help”)","noteIndex":0},"citationItems":[{"id":480,"uris":["http://zotero.org/users/local/rVaVAHaF/items/EWSQAMLY"],"uri":["http://zotero.org/users/local/rVaVAHaF/items/EWSQAMLY"],"itemData":{"id":480,"type":"webpage","title":"Phillips Curve - Economics Help","container-title":"Economics Help","abstract":"Definition of Phillips Curve (trade off between inflation and unemployment). Graphs to show how and why it can occur. real life data. Also different views on Phillips Curve Keynesian vs Monetarist. - short-term and long-term.","URL":"https://www.economicshelp.org/blog/1364/economics/phillips-curve-explained/","language":"en-GB","accessed":{"date-parts":[["2019",4,10]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Phillips Curve - Economics Help”). However, at a particular point, the economy reaches the full capacity, where no labor can be hired anymore. At this stage, producers increase the wages of the labor which results in wage inflation. In addition, they increase the prices of goods and services which lead to a constant rate of unemployment. Economists believe this phenomenon more realistic as producers prefer to increase prices first then increasing the number of labor. However, the report shared in the article indicates that the Philips curve is working in the economy to lower the unemployment rate. Government is trying to maintain the inflation rate by increasing the interest rate.
As the report has been discussed regarding the employment rate fluctuation in America. It shows that opportunities for new jobs are increasing and the unemployment level is low up to 3.7%. The proportion of the total population in America looking for a job and has increased to 0.2% ADDIN ZOTERO_TEMP (Irwin). The author explained that the above factors can lead to a change in the employment ratio. Various economics terms like interest rate, inflation, recession, the great depression, investment, and Philips curve are being discussed to figure out the actual reason for the significant increase in employment level. The author argued that inflation is the main factor that is a disturbing investment, interest rate, and somehow employment level by increasing the supply of money in the economy.
The article is important to understand the pattern of economic growth especially the fluctuation in the unemployment level but authors have ignored the one important aspect which shows that inflation is not the only element which impacts the employment level. The element is the investment level. The author is right on the point that inflation is the risk and it is affecting the interest rate, wages rate, and employment rate. However, producer or behavior of investors also has a crucial role. For instance, investment increases when investors do not see any risk related to the future value but a number of investors do not take risks. They decrease or limit their investment whenever notice that inflation can be higher in the future which can lead to lowering the risk of inflation ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"zyzeaVRA","properties":{"formattedCitation":"(Jayaraman and Singh)","plainCitation":"(Jayaraman and Singh)","noteIndex":0},"citationItems":[{"id":483,"uris":["http://zotero.org/users/local/rVaVAHaF/items/QD73NNLC"],"uri":["http://zotero.org/users/local/rVaVAHaF/items/QD73NNLC"],"itemData":{"id":483,"type":"article-journal","title":"Foreign Direct Investment and Employment Creation in Pacific Island Countries: An empirical study of Fiji","page":"18","source":"Zotero","language":"en","author":[{"family":"Jayaraman","given":"T K"},{"family":"Singh","given":"Baljeet"}]}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Jayaraman and Singh). In addition, when investors believe that inflation rate is going to be stable in future, they increase their investment it sometimes leads to the inflation before the estimated period because of the supply of money increases in the economy. The increase in investment leads to more opportunities to produce goods and services by providing a number of new jobs. As an economist, I will consider the aspects that the author of the article ignored because it is important to consider the other factors that can bring the fluctuation in the employment rate. I will argue that the factors like great recession and low investment lead to an increase in the money in consumer's hands. These increase in the supply of money brought inflation which hit the employment ratio. To control the inflation rate it is necessary to control the money supply by increasing the interest rate as with the increase in interest rate supply of money decreases and consumer influence to invest money for future which is beneficial for the economic growth as well as to control the employment and inflation ratio.
Therefore, it is concluded that employment level is higher in America and the author thinks that its inflation that playing its role. The author discussed other economic factors like great recession, interest rate, investment, and wage rate. However, he focused on the inflation rate and discussed the Phillips curve that is resulting in lowering the unemployment level. The author created a strong argument where inflation rate affects the number of economic indicators including employment level. There is an inverse relationship between inflation and unemployment. However, the author did not highlight the importance of investment level which also provides opportunities to develop new job. Also, it stabilizes the inflation rate and economic growth becomes sustainable.
Work Cited
ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Irwin, Neil. “Three Key Factors That Will Determine How Long the Hot Job Market Lasts.” The New York Times, 3 Nov. 2018. NYTimes.com, https://www.nytimes.com/2018/11/02/upshot/the-job-market-is-firing-on-all-cylinders-three-questions-will-determine-how-long-it-can-last.html.
Jayaraman, T. K., and Baljeet Singh. Foreign Direct Investment and Employment Creation in Pacific Island Countries: An Empirical Study of Fiji. p. 18.
“Phillips Curve - Economics Help.” Economics Help, https://www.economicshelp.org/blog/1364/economics/phillips-curve-explained/. Accessed 10 Apr. 2019.
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