basic forms in which manifest macroeconomic instability: unemployment and inflation cycles.
Inflation is the depreciation of money due to the excess amount of money in the economy over the amount of units of the value of goods produced in the sphere of circulation, and a certain amount of money, which are not provided with goods.There is a relationship of unemployment and inflation, which we consider in more detail.
Typically, inflation is expressed in the universal rise in prices, with falling purchasing power of the monetary unit.
important fact is that in addition to the total increase in the cost can vary the ratio of cost levels in relation to each other, in other words, in the process of inflation, the cost of some goods may grow faster than others.Inflation, by definition, is a disruption of the normal ratio of the amount of money circulating in the economy, as well as the weight of the goods, which are available on the market.Too rapidly increasing the money supply in relation to the growth of the mass of commodities, money depreciate and become less valuable.There is a persistent increase in prices, which is caused by excessive growth of the money supply.
One of the causes of inflation - "demand inflation".Due to lack of production capacity can not meet the increased demand, which leads to higher prices for the same volume of commodity production.Here one can clearly trace the relationship of unemployment and inflation.Although the results are not immediately visible.
Initially, at lower total costs, there is a high unemployment rate, with a significant proportion of production capacity is idle, increasing demand affects positively on the use of reserves, and does not lead to higher prices.In the next stage, the growth of demand in the economy is marked virtually full employment, while in some sectors of resource stocks run out, leading to an increase in their cost and wage growth.Inflation has already appeared, and the labor market is still shrinking, which allows a further increase in wages.Thus grew up costs passed on to consumers in the form of higher prices.Then reached a state of total employment, is now the company does not have to hire skilled, less productive workers, which reflects the additional increase in production costs and prices.There pervasive, full-time, but the economy can no longer increase the production volumes of goods, while rising prices.
should be noted that the second stage of the relationship of unemployment and inflation comes to a balance between employment and moderate inflation.
Another cause of inflation - "cost-push inflation".We analyze the relationship of unemployment and inflation in a given situation.In economics, there is a situation in which employment and the volume of goods decreased with an increase in prices.
In such a situation, the demand for goods and, consequently, for labor is not excessive.The rise in prices causes an increase in unit costs.products.Increased costs for meals.production does not change in the price level leads to a reduction in production volume, that is,to reduce the supply of goods, which determines the rise in prices.
costs Inflation reduces the actual volumes of products and services and, consequently, to an increase in unemployment.
In practice, it is difficult to distinguish between these two inflation without knowing its source, but it is difficult to promptly solve the problems of unemployment and inflation.But the solution to the problem of unemployment and inflation will contribute to the economic development of society.
Thus, macroeconomic instability, unemployment and inflation are significantly higher value to the economy than it seems initially.
