macro costs of unemployment/inflation/deflation (copy)?????

costs of unemployment (economic) 1

less RGDP because less work = less output in the economy

costs of unemployment (economic) 2

loss of income for unemployed workers (benefits are worse than employment)

costs of unemployment (economic) 3

loss of gov tax revenue

costs of unemployment (economic) 4

gov costs from the benefit

costs of unemployment (economic) 5

gov costs of dealing with social problems

costs of unemployment (economic) 6

larger budget deficit/smaller budget surplus

costs of unemployment (economic) 7

more income inequality

costs of unemployment (economic) 8

unemployed people have difficulties finding future work because they lose skills after not working for a long time/can’t obtain new skills from working

costs of unemployment (personal) 1

personal issues: incr debt, self esteem loss, stress, worse health, family tension and breakdown, suicide

costs of unemployment (personal) 2

greater social problems: poverty = incr crime, violence, drug use, homelessness

whats the worst kind of unemployment

cyclical

costs of inflation LOSERS (theres 4)

fixed income people
cash holders
savers
lenders

costs of inflation WINNERS (theres 2)

payers of fixed incomes
borrowers (debtors)

costs of inflation 1

uncertainty - you can’t predict inflation so then firms are cautious so less investment so less economic growth

costs of inflation 2

lowers incentive to save and also increases spending so they can avoid future high prices

costs of inflation 3

export competitiveness, our exports are too expensive so we’re not internationally competitive

costs of inflation 4

high infl = bad eco growth bcause uncertainty AND less savings = no investment

costs of inflation 5

fucks up price signalling - incr allocative ineff/bad resource allocation

costs of inflation 6

unequal social and personal costs, low income people can’t put their savings into assets that keep their value i.e real estate and also rising necessity prices cut deeper into incomes of low income peopl

costs of deflation 1

redistribution effects - opposite of inflation; good for fixed inc, cash holders, savers and lenders

costs of deflation 2

increase in the real value of debt

costs of deflation 3

uncertainty, can’t predict costs like inflation

costs of deflation 4

deferred consumption + increasing cyclical unemployment i.e they don’t spend any money cause prices will likely be lower later = deflationary spiral

costs of deflation 5

risk of bankruptcies and a financial crisis, if recession and incomes are falling AND debt real value increases theres probs gonna be consumer and firm bankruptcies because they can’t pay their debts back = financial crisis

costs of deflation 6

ineff resource allocation - prices fall wack - signaling weird - shit allocation

costs of deflation 7

policy ineffectiveness - hard for policies to deal w deflation because if people believe prices will lower, its hard to change their minds

positive deflation!

good for international competitivene