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Essay / Research Paper Abstract
This 4-page paper focuses on defining unemployment and inflation and comparing how the two impact one another. Bibliography lists one source.
Page Count:
4 pages (~225 words per page)
File: D0_MTuneinfl.rtf
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Unformatted sample text from the term paper:
created. There has also been much written in past years about how Fed chairman Alan Greenspans efforts to stave off inflation by lowering the interest rates and slowly increasing the
money supply may have backfired and put us in the current recession. The question then becomes, is there a direct connection between inflation and unemployment? If so, what is that
connection? To answer this question, its first helpful to examine what, exactly, inflation and unemployment are and how they might relate to
each other. Inflation, in its most basic form, is when there is too much money in the money supply chasing too few
number of goods. What happens in this particular case is that the price of goods goes up (basically because the manufacturers know that with the extra money supply, they can
raise the price). According to Mojaver, furthermore, inflation also leads to unfair economic distribution (Mojaver, 2003). He goes on to use specific examples (using, by the way, the so-called "Big
Mac" theory of economics, by which the economy is measured in terms of the cost of hamburgers). During the late 1970s, he notes, inflation was quite high - if a
family borrowed $10,000 at 8 percent interest in 1978, to repay $10,800 in 1979, because of inflation (i.e., prices increasing), the family would only end up paying back $9,730, which
means the family paid back less purchasing power than it borrowed (Mojaver, 2003). Low inflation, he notes, brings just the opposite, benefiting
creditors (Mojaver, 2003). That same family borrowing $10,000 at 10 percent interest in 1982, ends up repaying the bank $11,000 in 1983 (Mojaver, 2003). The main problem with inflation, however,
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