Business Economics Course Project - Part 2

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Business Economics
Course Project - Part 2

Course Instructor
De Cossio

Prepared by
Muhammad Wasiq Rashid (D03521035)

Submitted on
5th February 2011

Chapter 16, Question 5
Why is frictional unemployment important to have in any economy? Frictional unemployment is the short-term unemployment of people who are changing jobs, careers, or locations. This category of unemployment includes the jobless who have the skills and competencies to land a job, and are in the process of finding a job, but have not landed a job yet. Workers who look out for a new job when still retaining their old jobs do not count under frictional unemployment. Many economists consider frictional unemployment a sign of economic well-being, for this type of unemployment only exists in a fast-growing economy with an expanding, mobile, flexible, and adaptable labor force having choices. Frictional unemployment benefits the workers as it allows them to seek the jobs they like most and for which they remain best suited, and benefits the companies by allowing them to choose from among the best talent. Absence of frictional unemployment entails people remaining in the same jobs for life, creating a static system that suppresses innovation and rusticates skills. Negative fallouts of frictional unemployment come when workers delay re-entering the workforce or when job mismatches become too frequent. This reduces the availability of talent to companies and increases turnover, causing losses to productivity and the economy as a whole. This causes governments and policymakers to try and reduce frictional employment.

Chapter 16, Question 6
Explain why Hyperinflation has such a devastating impact on economies. Explain what it takes to stop hyperinflation. Hyperinflation defines a large increase in the price level. It has been said that there is no exact definition for the term, but cases of hyperinflation tend to be expresses in terms of multiples rather than percentages. The reason...
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