Relationship Between Inflation Unemployment And Productivity

There is usu tout ensembley an inverse relationship between unemployment and fee Unemployment impart lead to humble spending and ideally comparatively lower levels of inflation . However this relation holds true when all other things remain equal . Certain changes in the attention and economic factors lead to imbalance in the inverse relationship between inflation and unemploymentWhen in that location is employment , organizations want to exact the best talent from the limited number of available concourse . This leads to shelling out more wages which contri onlyes to inflation . When there is unemployment organizations get the best talents at wages comparatively lower as there are many people unforced to take up jobs . Also if workers believe that inflation will be higher in future then they talk over for higher wages This leads to passing on the burden to the customer who in turns pays higher and contributes to rising inflation . In much(prenominal) changes in economic scenario there could be a deport relationship between inflation and employmentIn 1987 , Nobel laureate Robert Solow famously discover : You can see the computer age everywhere but in the productiveness statistics Despite massive investment in IT infrastructure , productivity growth was xistent .

At the time , this was know as the Productivity ParadoxBut by 1995 there was an increase in productivity due to standardization of technology whereby new employees would not need to learn languages to be able to use computers for turn office tasks . There was higher productivity will slight manpower . Hence with the rise of productivity employment rock-bottom . The above establishes a relationship between inflation , productivity and employment . However , the effects of each factor interchange according to the macro economic scenarioReferencesTopalova , Petia Trade Liberalization and hearty Productivity the Case of India , Yale University , available at HYPERLINK http /network .econ .yale .edu /seminars network .econ .yale .edu /seminars , 2003Central Bank Talk : Does it Matter and WhyHYPERLINK http /www .federalreserve .gov /boarddocs /speeches /2003 .pd f http /www .federalreserve .gov /boarddocs /speeches /2003 .pdfPAGEPAGE 3...If you want to get a full essay, order it on our website: Orderessay

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