The Correlation Between Inflation And Unemployment

Submitted By mikecatmo
Words: 2624
Pages: 11
Open Document
Humber College
Macroeconomics Group Project
The Correlation Between Inflation & Unemployment

Group 5 Members: Candace Crook, Michael Catalfamo, Melissa Faria, Krishna Lad, Kerri O’Hara, Stephanie Procenko & Brandon Vel

Executive Summary
Within this report data was collected and analyzed to determine whether inflation rates and unemployment rates had a negative correlation to one another. According to the theory, the more the Consumer Price Index rises, the lower unemployment rates will become. The goal of this paper was to either prove or disprove whether provincial inflation is negatively correlated to provincial unemployment rates, whereas when a provinces’ inflation increases, their unemployment rate decreases.

There are many factors in each province that contribute to each rate and include: population sizes, employment insurance benefits, and how much money a province generates; therefore it was important to research inflation rates and unemployment rates for Ontario(Canada’s largest population with approximately 39% of all residents), Alberta(Canada’s richest province), and Newfoundland & Labrador(one of Canada’s smallest and poorest provinces). The data was collected from the base year of 1992 to the end year 2012. The report is broken into four key sections, background, methodology, analysis, and conclusion.

The background information consisted of research to help understand policy information and economic factors that influence both the consumer price index and unemployment across the three provinces. It includes information about how The Bank of Canada uses an inflation target to keep inflation at approximately 2% to prevent periods of boom and deflation. It also defines why each province measures different levels of unemployment.
In the Methodology section, all of the data collected has been organized into provincial categories for unemployment and inflation. This information was used to conduct an analysis and run a correlation test.

During the analysis, correlations were determined to be negative for each province. Ontario showed a weak negative correlation of -0.41, Alberta had more moderate negative correlation of -0.64, and Newfoundland & Labrador had the strongest negative correlation of- 0.94.

This was followed with the analytical breakdown of what each provinces correlation between inflation and unemployment indicated and why. For example, the reason Newfoundland had the strongest negative correlation because for almost every year from 1992-2012, their inflation grew slowly and unemployment declined in relation.

Finally, a conclusion was generated based on the background knowledge and analysis and based on information from the background. An example of this explains why Ontario had a weaker negative correlation because their population of Ontario was young and had high levels of frictional unemployment.

Table of Content
Background………………………………………………………………………………..pg.4
Methodology………………………………………………………………………………pg.8
Analysis……………………………………………………………………………………pg.9
Conclusion…………………………………………………………………………………pg12
Work Cited……………………………………………………………………

Background
Background information for the Canadian Consumer Price Index
The consumer price index (CPI) most accurately measures inflation within a country. In economics, the CPI helps define how price levels increase, and subsequently, their purchasing power decrease.
Before 1991, Inflation in Canada went through periods of boom and recessions. During booms, the economy experiences large inflation rates and the economy benefits for a short period of time. However, periods of boom were followed by recessions that had serious impacts on unemployment rates. During recessions, the economy experiences deflation and many jobs are lost. In 1991, The Bank of Canada implemented an inflation control target to keep the rates between 1 and 3 percent. This target would prevent Canada from experiencing periods of extreme boom and recession by keeping the
Show More

Related Documents: The Correlation Between Inflation And Unemployment

Essay on The Virtual Environment Work Team

accounting firm offers tax preparation services to individuals. T.A. Stearns was a popular national accounting firm because of its superior reputation for high quality of its advice and the excellence of its service. Superior computer databases and analysis tools that were highly technical in tax laws they covered and in code they were written was the key to T.A. Stearns reputation. They were perfected by high levels of programming skills with the ability to understand the law. T.A. Stearns’ work…

Words 1552 - Pages 7

DCrawford MT140 10 Unit2Assignment Essay

Contemporary Approaches and Environments of a Business By: Deanna Crawford April 2, 2015 MT 140-10: Intro to Management Instructor Young Kaplan University The contemporary approaches to management include: sociotechnical theory, quantitative management, organizational behavior, and systems theory. Regarding environments, an organization has an internal environment, a competitive environment, and a macroenvironment. I have been granted the opportunity to explain how these approaches are different…

Words 531 - Pages 3

Contemporary Overview Of Marketing

P4. Benefits and costs of a marketing approach ............................................................................... 9 P5. Macro and micro environmental factors that influence marketing decisions........................ 10 1. Macro Environment........................................................................................................... 10 2. Micro Environment ........................................................................................................... 11 P6…

Words 3377 - Pages 14

Essay about BU 481 Session 3 And 4 Q Posting

Strategy, Strategic Analysis, Assessing Performance BU 481: Session 3 and 4 Today’s Learning Objectives • Assessing the Industry/Environment-Strategy Link • Tools for Industry and Environment Analysis • Incorporate in Readings: – Textbook Chapters 4 & 5 – Article: “How Competitive Forces Shape Strategy” • Apply theory/frameworks – Case: IMAX: Larger than Life Course Roadmap Strategy Formulation Setting Direction Assessing Performance General Manager Implementing Change Strategy Implementatio…

Words 1583 - Pages 7

Environment Analysis for Boost Juice Bar Essay

Environment analysis for Boost Juice Bar Summary 1. Macro environment analysis: the major externals which affect company’s decision making, marketing strategy and performance. It includes: (1) Economic environment, the economic factors influence consumer behaviour. (2) Technological environment, externals in technology that affect company’s performance. (3) Political and legal environment, factors related to policy and law that influence company’s operation. (4) Cultural and…

Words 994 - Pages 4

social and cultural research Essay

Recall: Micro world- influences who you are (e.g. peers, family) Macro World- also influences us but is not in your immediate surroundings (media, government) Personal experience- has influence on who you are Public knowledge- we get from media, libraries Social – Cultural Research (8 steps) 1. Clearly define your topic or question. Try to be as specific as possible. 2. Start planning – manageable sections (set yourself achievable targets) 3. Start reading secondary research (not done…

Words 696 - Pages 3

Apple Inc. Essays

this we have chosen United states as market. First ipad launched about early and mid of the year 2010 and they called as 1st generation moreover they have launched more four so total five new series of ipad from 2010 to today and they respectively ipad 2, 3rd generation, 4th generation and finally ipad mini. There are opportunities in business environments that are not being fully exploited by the competition. Strategic gap can be filling by substitute industries, other strategic groups or strategic…

Words 764 - Pages 4

Sociological Approaches To Health And Health Care

Chapter 2 Notes Sociological approaches to health and health care Introduction -Sociology is the study of human interaction, its relation to overall social structures -Sociology of health seeks to understand the illnesses and health within societies -Sociology in medicine was first articulated by Robert Strauss in 1957 -Sociology in medicine wants to understand health related problems to create better public health -Sociology of medicine wants to understand society or sociological concepts…

Words 1154 - Pages 5

Marketing and Internal Marketing Audit Essay

executive summary describes the report’s objectives, major findings in relation to the analysis of the market, and strategic recommendations. It is designed to provide a busy reader with the major issues contained in the report. The executive summary allows the reader to gain insight to key outcomes without having to read all of the report. Bullet-points can be used to present the key points in the executive summary. 2. Business and industry background A brief description of what your company is about…

Words 639 - Pages 3

Kingsford Charcoal Essay

category had slowed from 4% growth from 1998 to 1999 to 2 % growth from first half of 1999to the first half of 2000 * they found a narrowing of the price gap across various charcoal brands as result of series of private label price increases * approaches – analysis tools used * competitor analysis – analyse pricing and the product * micro and macro environmental factors * SWOT analysis (micro) * PESTEL analysis (macro) * key issues * charcoal vs gas * kingsford…

Words 626 - Pages 3