inflation unemployment and business cycle

Inflation

Persistent increase in price level

Deflation

Persisted decrease in price level

Unanticipated inflation to payers and creditors

They gain because real value of amount decrease (fixed amount )

They loss because real value of amount they receive decreases (fixed amount)

Unanticipated deflation

To payers and creditors

They loss because real value of amount they pay increase (fixed amount)

They gain real value of amount they received increases (fixed amount

Interest

Exist when no inflation or deflation

2. Types

Nominal interest rate(actual rate )without considering inflation

Real interest rate (adjust the nominal rate for inflation )show how much you earn after inflation

Underemployed

Who have job but not to their full potential (part time but want full time)

Unemployed

Want to have job but fail to find one

Looking for and available to work

Labour force

Those working and looking for work

Underemployed rate

No of underemployed/labour force X 100

Unemployment rate

No of unemployed/labour force X100

Cost of unemployment to unemployed

Lower living standard

Loss of skills

Family problems

Cost of unemployment to government

Revenue from income tax drop

Need to use more resources to address unemployment

Cost of unemployment to society

Increase crime rate

Reduce aggregate demand

Loss of output (fewer good and services)

Recovery and peak

Real gdp is increasing

Unemployment rate decreasing

Price level is increasing

Real gdp at highest

Unemployment rate at lowest

Price level at highest

Business cycle recession and trough

Real GDP is decreasing

Unemployment rate increasing

Price level is decreasing

Real GDP at lowest

Unemployment rate at highest

Price level at lowest