Module Name

[ Introduction to Economic ]

Submitted To:

[ Tr Daw Aye Aye Aung ]

Submitted By:

[ Shwe Yee Win Han ]

[ Student ID – 2020A3100 ]
 INFLATION

The increasing of the overall price level in the market is called inflation(Strategy
first,lecture topic-7,2020).Inflation is the rate at which the general level of price for
goods and services is rising and consequently, the purchasing power of the currency
is falling.Inflation represents how much more exensive the relevant set of goods or
services has become over a certain period,most commonly a year.Inflation can be
viewed positively or negatively depending on the individual viewpoint and rate of
change.Inflation is good for tangible assets like premises or lands or lands or stocked
commodites because inflation raises the value of the assets.But people holding cash
may not like inflation as it erodes the value of their cash holdings and the purchasing
power is fall[ CITATION JAM202 \l 1033 ].

Inflation can be classified into three types [ CITATION JAM202 \l 1033 ].They are –

1. Demand-pull inflation
2. Cost-push inflation
3. Build-in inflation

1.Demand-pull inflation

Demand-pull inflation occurs when the demand of good and servies in an economy
increases rapidly than the production capacity. It creates the demand-supply gaps with
higher demand and lower supply and thus causes the higher price.The supply is not
sufficient enough for the increased demand.So,the amount of product is less than
compared to the demand .The result is that the price is rise and causes
inflation[ CITATION JAM201 \l 1033 ].

2.Cost-push inflation
 The increase of production process input causes the cost-push inflation.For
example,the increase of the raw materials and the labor costs which makes the
production risk high.Therefore, the price of the final good and services is high and it
becames the one of the reasons which causes the inflation [ CITATION JAM202 \l 1033 ].

3.Build-in inflation

Built-in inflation is kind of adaptive expectations.Due to the increase in the price of

good and services, the employees expect more wages to maintain their cost of living.

If the employees expects inflation or they have experienced price inflation in the past,

they push for the higher nominal wages because inflation and price rises cause their
cost of living raise.So,it can be considered that higher wages costs causes higher costs
of goods and services which is called inflation.And the expectation of inflation
encourages the employees to push for the higher nominal wagesa for their costs of
living.Therefore,the wages and prices are related and forms vice-versa and in another
word, wage-price spiral[ CITATION JAM203 \l 1033 ].

Effect of inflation

Money loses its value over time when price rises that is the same amount of
money but the different purchasing power over time.Because of inflation,some of the
people who can’t afford for the higher price level are struggle very hard for his or her
living.So, it effects on the lower-class families .But for the values of fixed assets such
as lands and golds are became more high and high after many years.So,inflation raises
the value of assets.

UNEMPLOYMENT
 The employment rate is the percentage of labor force that employed in the
country.It is one of the key factor of country economy. Unemployment means when a
person who is actively searching for employment is unable to find work.Unemployment
is often used as a measure of the economy. The most frequent measure of
unemployment is the unemployment rate,which is the number of unemployed people
divided by the number of people in the labor force [ CITATION BRI20 \l 1033 ] .
Unemployment is a serious social and economic issue that results in a tremendous
impact on everthing.Unemployment can be distinguished into four types [ CITATION
ENO13 \l 1033 ].They are-

1. Frictional Unemployment
2. Cyclical unemployment
3. Structural unemployment
4. Seasonal unempioyment

1.Frictional Unemployment

A person is frictionally unemployed if they had been fired for being bad at jobs
or if they had quit their jobs because they dislike it and look for another new jobs that
they can do well.Besides,the students who just finished school and are looking for a
job for the first time can be called as fractionally unemployed people.Ususally this
type of unemployment is short-lived in nature [ CITATION ENO131 \l 1033 ].

2. Cyclical Unemployment

During the recessionary periods and declines in the bad economic time,people
are out of work because the economy is slowed and there is no demand for their
products.So,the business suffers financial crisis and high interest rates and thus it is
impossible to operate the business anymore.Although a worker is good at his or her
jobs,he is auto laid off because the company can’t operate during the bad economic
times or recessionary periods.Therefore, the bussiness cycle is low and then the
cyclical unemployment will rise[ CITATION ENO131 \l 1033 ].

3.Structural unemployment
 Structural unemployment occurs due to the change in technology in the
structure of economy.So,the human’s skill does not match with their jobs.So, the
employers came to replace the horse-drawn by automobiles and the workers who
worked with horses became structurally umemployed.So,a person’s skills are no
longer needed in an economy,that person is structurally unemployed.And because
of the change in technology,it can save the time and can do more productions
compared to human’s services and this leads to structural unemployment [ CITATION
ENO131 \l 1033 ].

4.Seasonal unemployment

Seasonal unemployment happens when a person’s job is only available at

certain time of year.The jobs such as agriculture and construction can be done only
at a certain time of year.So, after this certain times of years,people experience
seasonal unemployment which refers to the time period when the demand for labor
is lower than the normal and they have to look for the other jobs for the rest of the
year.This is called seasonal unemployment[ CITATION ENO131 \l 1033 ].

Effects of unemployment

Unemployment effectds both workers and the other bussiness related with the
unemployed people because unemployment causes workers to suffer financial
difficulities that may lead to emotional destruction.When it happens, consumer
spending is low or the demand some bussiness is lower leading to a recession or
even a depression.Unemployment result in lowered purchasing power, and thus
lower profits for bussiness and leads to budget cuts and workforce reductions.It
creates a cycle that goes on and on and on.Everyone loses in the end.So,
unemployment effects so bad for the unemployed people and the other bussiness
related with these people.Therefore at that time, the economic level of the country
became more lower and lower compared to other competitive countries [ CITATION
CFI201 \l 1033 ].
 References

BARNIER, B., 2020. Investopedia. [online] Investopedia. Available at:

<https://www.investopedia.com/> [Accessed 11 November 2020].

CHEN, J., 2020. Inflation. [online] Investopedia. Available at:

<https://www.investopedia.com/terms/i/inflation.asp> [Accessed 11 November 2020].

enotes. 2020. 4 Types Of Unemployment. [online] Available at: <https://www.enotes.com/homework-

help/describe-four-types-unemployment-how-often-do-four-443946> [Accessed 11 November 2020].

CFI. 2020. Unemployment. [online] Available at:

<https://corporatefinanceinstitute.com/resources/knowledge/economics/unemployment/> [Accessed
11 November 2020].