News article titled as Eurozone unemployment hits record, inflation falls reports the latest Eurozone statistics released by Eurostat in 1st March, 2013. It indicates an ideal that unemployment rate soars while the inflation rate falls greatly. In another word, this article reflects one of significant principle of economic which is society faces a short-run trade-off between inflation and unemployment. Under the context of widely-affected debt crisis, article states that newly published official statistics shows that “unemployment in the 17-nation Eurozone rose to a record 11.9 percent in January from 11.8 percent in December, with nearly 19million people out of work.”(McManus, 2013) In the other hand, Eurozone’s inflation rate maintained its stability at 2.0 percent in January 2013 and financial experts expect it will stays its ground since the high unemployment rate expected to be maintain its trend until year 2014. Base on such phenomenon, economy principle of a short-run trade-off between unemployment rate and inflation embeds in the fact of news. In the following, essay explains why higher employment rate leads a decreasing or stable inflation rate in short run. Firstly, financial experts indicate high unemployment rate “reflects the state of consumer demand which inevitably suffers at times of high unemployment when people worry about job security and prefer to save their money rather than spend it.”(McManus, 2013) As a result of global economy downturn, individuals observe the trend of increasingly high unemployment rate and result in a weaker demand of purchase goods and service as people might worry about job security and consequence of financial crisis. Then refers to graph 1 which further illustrates on how high unemployment rate leads to a relatively low inflation rate as it presents the demand and supply curve of people in Eurozone. Demand curve shows as downward sloping while supply curve presents as upward sloping. As a result of decreased demand of purchase goods and service, the demand curve then shifts to left from the initial demand curve and marks as the new demand curve while the supply curve remains the same. At this time, the market continues sells goods and service at the initial price where states as P1, but people only can purchase lesser quantity of goods and service at this price. Thus, a surplus of goods and services will created in the…
Nowadays, more people pay their attentions on one word, “inflation”, because of the weak global economy. Inflation is when rising of general price level for goods and services happens with decreasing of purchasing power for people. In a short sentence, when inflation happens, people cannot use same amount of money to buy same amount of purchases as much as before.
For finding out if inflation happens and what extent it has done, we always use CPI (Consumer Price Index)…
| |A) |a movement along the aggregate demand curve. |
| |B) |a shift of the aggregate demand curve. |
| |C) |both a movement along the aggregate demand curve and a shift in the curve. |
| |D) |no change in the…
households demand goods and ervices which are supplied by firm in exchange for money.
In RESOURCE MARKETS, firms demand resources which are supplied by households in exchange for money.
Table showing how much of a good or service consumers will want to buy at various prices.
* $ | * $100 | * $80 | * $60 | * $40 | * $20 | * $0 |
* Quantity | * 0 | * 40 | * 80 | * 120 | * 160 | * 200 |
Law of Demand- price of a…
The current state of the United Kingdom’s economy.
The Consumer price indices is the change of the general level of the price of goods and services bought from an average household, food and gas and electric etc. The consumer price index made no change from October to November and is currently standing at 2.7% (www.ons.gov.uk, 2012). Most of the upward inflation came from food and non-alcoholic drinks, increasing by 1.1%, i.e. lemonade bread and vegetables. Also gas and electric put…
Supply and Demand of the Market
In the society we live in today there are many different outcomes in profit of firms and households based on how they manage their prices used in their businesses. A variety of factors influence the economy of this country such as demand, supply, or the income of the buyers. These few factors would either increase the profit of many businesses in the United States or decrease depending on how they shift. Also, based on that, there would be an effect on surplus of…
II. Introduction to DEMAND
A DEMAND FUNCTION maps out the quantity of a good that will be bought at each price.
• Quantity demanded falls as prices rise, so the demand curve slopes DOWNWARD.
• An INDIVIDUAL DEMAND FUNCTION maps out the quantity of a good that an individual would buy at each price.
• A MARKET DEMAND FUNCTION maps out the total quantity of a good that would be bought in a market at each price. It is the horizontal sum of the individual demand functions.
Changes in tastes…
A) The IS curve slopes downward and to the right.
B) The LM curve slopes upward and to the right.
C) The slope of the LM curve depends on the interest sensitivity of money demand. An elastic money demand function caused the LM curve to be relatively flat. An inelastic money demand function caused the LM curve to be steep.
D) The slope of the IS curve depends on the slope of the investment function. If investment is highly interest elastic, then the IS curve is relatively flat. If…
Using supply and demand curves
As you have probably worked out by now, virtually any market can be analysed using supply and demand curves, and the markets for currency are no different. Luckily, in terms of remembering the diagram, the supply curve has the normal upward sloping look about it, and the demand curve is a normal downward sloping curve.
Why is the demand curve downward sloping?
Have a look at the diagram below:
This is the standard price/quantity situation, except…
percent for the last ten quarters, then for IS curve I, real
GDP equals 8,800 − 25(4) − 25(4) − 25(4) − 25(4) − 20(4) − 20(4) − 20(4) − 15(4) − 15(4) −
10(4) = 8,000. For IS curve II, real GDP equals 8,400 − 5(4) − 5(4) − 5(4) − 5(4) − 10(4) −
15(4) − 15(4) − 15(4) − 20(4) = 8,000.
(b) For IS curve I, real GDP in the first quarter equals 8,800 − 25(3) − 25(4) − 25(4) − 25(4) −
20(4) − 20(4) − 20(4) − 15(4) − 15(4) − 10(4) = 8,025. Using the same IS curve, it is easy to
show that for quarters two through…