economic aspects

Topics: Unemployment, Economics, Inflation Pages: 7 (957 words) Published: September 1, 2014

Project part 2
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Why is frictional unemployment important to have in any economy? Frictional unemployment is the kind of unemployment that arises as a result of people moving from one job to another, career or location. It involves people who have both the competencies and skills of getting a job and in the stages of getting one though they have not become successful in finding one1. For those people looking for new jobs while still continuing with their old ones are not categorized to be part of frictional unemployment. Frictional unemployment plays quite a major role within any given economy. This is due to the fact that it indicates that an economy is doing well. In line with this unemployment exists in an economy that is growing faster characterized by an expanding labor force that is adaptable, flexible and mobile and which has many choices2. Workers benefit greatly from frictional unemployment since it provides them with the opportunity to look for jobs that suits them most. Additionally it is also beneficial to companies since it enables the companies to a wide range of alternatives to choose from as far getting the best talent is concerned. if there is no frictional unemployment in the economy many people would engage in doing the same kind of jobs their entire life hence a stagnant system would be created that would suppress both rusticate skills and innovation3. Frictional unemployment bares great significance within the economy due to the fact that it provides a match between the demands for worker with its supply thus ensuring that an equilibrium point is arrived at within the labor market. Frictional unemployment exists since within the labor market there is imperfect information whereby workers have to look for the kind of employment that is most appropriate for them. Explain why hyperinflation has such a devastating impact on economies. Explain what it takes to stop hyperinflation. There are two reasons as why hyperinflation has a devastating impact on economies. The first reason relates to the function of money which is acting as a store of value. With hyperinflation in the economy the store of value is destroyed hence the well off of people is reduced4. When people experience a loss in their stored value consumption and investment becomes difficult due to the fact there is a reduction in their wealth. The second reason behind the impact of hyperinflation relates to the fact that prices carry information. When people become worried about price volatility the costs of economic transactions increases. This is due to the fact that consideration must be placed on value of currency that is current at the time. As a result in order to stop hyperinflation there is greater need of keeping up with price changes that occur hourly5.

Describe the three types of unemployment. What types of government programs would be most effective in combating each type of unemployment? Structure unemployment
This is the kind of unemployment that results from the absence of demand of those workers who are actually available and are in need of employment. It can be identified to be a rise from there being changes in technology and the levels of consumer demand6. The declining demand associated with cigarette consumption is a very good example of structure unemployment whereby the demand for tobacco is made to change when there are changes in cigarette demand. There are a number of reasons behind the demand of workers not being in existence. One of the reasons include technological changes whereby machines being introduced in organizations some workers become replaced hence they become part of the unemployed group7. Another reason relates to changes in the economy and the replacement of capital which can basically lead to the demand of workers being nonexistent. Frictional unemployment

Frictional unemployment is the kind of unemployment that arises as a...

References: Arthur O. and Sheffrin S. M. (2003). Economics: Principles in Action. Upper Saddle River, New Jersey
Christopher R., Lipsey and Richard (2008). “Macroeconomics”. Toronto, Ontario, Canada: Pearson Education Canada.
Harris, Seymour E. (2005). The New Economics: Keynes ' Influence on Theory and Public Policy. Kessinger Publishing.
Sloman, John (2004). Economics. Penguin
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