Roll No 01 M.com 1 st Subject: Principles of Economics Presentation Topic: Unemployment and Inf lation o Definition of Unemployment o Three Important Categories o Types of Unemployment o Natural Rate of Unemployment o Reasons of Unemployment o Consequences of Unemployment o Solution for Unemployment o Calculation of Unemployment Unemployment Refers to the situation where the people of country do not find work to earn their livelihood.
The situation in which people do not find the work
despite of their willingness to do work. Measuring unemployment is the job of BLS(Bureau of Labor Statistics) which is part of Department of Labor. BLS(Bureau of Labor Statistics) places each adult (age 16 and older) into one of three categories. 1) Employed Labor Force 2) Unemployed 3) Not in Labor Force In Pakistan there is Pakistan bureau of statistics. 1. Structural Unemployment 2. Seasonal Unemployment 3. Frictional Unemployment 4. Cyclical Unemployment 5. Technological Unemployment In Every Economy the 100% employment is impossible so according to the economist some people will be unemployed in each and every economy and that is called as natural rate of unemployment .
Natural rate of unemployment is between 4-6% (in
some books 2.5-6%).
It is also called as Full Employment.
1. Increase In Population. 2. Rural-urban Migration. 3. Downsizing. 4. Lack Of Capital. 5. Lack Of Credit Facility. 6. Seasonal Variation. 7. Technology Advancement. 8. Lack Of Skills Work Experience. 9. Lack Of Education. 1. Rise In Criminal Activity. 2. Violence. 3. Drug Addiction. 4. Terrorism. 5. Social And Moral Evils. 1. Establishment Of Small And Medium Scale Industries. 2. Vocational And Technical Training Centers. 3. Encouragement Of Construction Industry. 4. Internship Programs. 5. Provision Of Easy Credit. Unemployment rate is the ratio of the number of people unemployed to the to the total number in the labor force .
Unemployment Rate= Unemployed
X 100 Labor Force
Example: If labor force is 15 million and 3 million are
unemployed then unemployment rate is 3 million/15 million x 100 = 20% The labor force participation rate is the ratio of labor force to the population (age of 16 or above).
This Basically shows the portion of population that is
contributing to labor force.
Labor force Participation= Labor force
X 100 Total Population above 16 age o Definition Of Inflation o Types Of Inflation o Inflation Types On Basis Of Speed o Cause If Inflation o Calculation Of Inflation o Monetary Measures To Control Inflation o Fiscal Measure To Control Inflation The Persistent increase in the general price level of goods and services in a economy of an country is known as inflation.
When too much money chases too few goods is
called inflation. oGeneral Price= We Take Average of Basket of goods(300-500 Items). oPersistent= نہ کہ ایک یا دو دن کا اتار چڑھاؤ۔، دھیرے دھیرے پرائزز کا بڑھنا 1. Demand Pull Inflation (Related With Demand Side)
2. Cost Push Inflation
(Related With Supply Side) 1. Population Growth 2. Deficit Financing 3. Increase In Wages 4. Foreign Remittance 1.Increase In Cost Of Raw Material. 2.Increase In Wages Rate. 3.Decrease In Production. 4.Imported Inflation. 5.Indirect Taxes. 1.Creeping or Mild inflation (between ,less than 3% to 3.00% a year) 2.Walking inflation (Between 3.01% to 10.00% a year ) 3.Galloping (10.00% or more a year) 4.Hyper inflation (50% a month) There are various formulae for calculating inflation rate. 1. WPI (Whole sale price index) 2. SPI (Sensitive Price Index) 3. CPI (Consumer Price Index)
Most Common formula is CPI ( Consumer Price Index)
CPI = Current Price level – Previous Price Level
Previous Price Level X 100 1.Monetary Policy a) Made and adopted by Central Bank b) To manage the money supply in country
2.Fiscal Policy a) Made by Government b) To manage the public Revenue and Public Expenditure 1.Central bank reduces the money supply by selling bonds etc.
2.The central bank raises its interest
rate for the commercial banks. 1.Govt. can Reduce public expenditure
2.Govt. raises the direct tax to discourage
the consumption thus aggregate demand for goods falls. To discuss the relationship between unemployment and inflation according to Phillips curve, whether application or not, in Pakistan. There is tradeoff between inflation and unemployment in the short run.
When unemployment decrease, inflation increases and
vice versa.
In the long run there is no tradeoff between
unemployment and inflation rate. This is the combination of two words. 1. Stagnation 2. Inflation The condition of the economy where the price increase in economy with high unemployment. Reason: Decrease in Aggregate Supply. Thank You You can get notes from me.