The relationship between Unemployment and Inflation in China and US
I just need conclusion part
Inflation is the average increase of price level of all goods and services over a period of time.
This results in a reduction of the purchasing power. This would also change the general cost of
living. When inflation falls below 0%, this causes deflation. This is when the general price level
of goods and services decreases.
There are 3 main causes of types of inflation, demand-pull inflation, cost-push inflation and
Demand-pull inflation occurs when the demand of a specific good or service increase much more
that the supply or production capacity of that good or service. This increases the price of the
good rapidly since the demand of that good is relatively very high, which creates a gap between
the demand and supply.
Cost-push inflation occurs when the price of the inputs used to produce goods or services are
very high, which will force suppliers to raise the price due to the high costs of producing the
product. Higher cost of finished products leads to an increase of price level.
Built-in inflation usually originates from demand-pill inflation and cost-push inflation, this is
caused by expectations. The price level of goods and services increases, the workers expect to
get higher wages due to the increase of price level, therefore the price level increases even
Anticipated inflation is expected inflation, this is where wages and interest rate adjustments
occur. Businesses also tend to change prices of their products due to inflation, this is called menu
cost. Small businesses can change prices frequently, as it wont cost them a lot, whereas large
businesses may find it difficult ti change prices weekly or monthly.
Unanticipated inflation is unexpected inflation. There is where people don't know that inflation
occurs until the general price level increases. The purchasing power therefore reduces, keeping
many people unprotected.
Unemployment is the situation where a person is looking for a job, but cannot find one. The
unemployment rate is measures the percentage of the labor force that is unemployed. This is
calculated by diving the labor force by the number of unemployed (Labor force is the addition of
employed and unemployed). Unemployment rate is not always accurate since there are some
factors that are not taken into consideration, such as discouraged worker; these are workers who
are able and willing to work but stopped looking for a job during a specific period of time,
claiming that there are no jobs available for them. Part time jobs and false claims are also factors
that reduces the efficiency of calculating the unemployment rate.