What is Inflation and how it cause
Inflation is a rise in prices, leading to decline in the purchasing power of a country. Inflation is a normal
economic development, as long as the annual percentage remains low, once the percentage rise in
pre-determined level, it is considered inflationary crisis.
There are many causes of inflation, which depends on many factors. For example, inflation may occur,
excessive government printing money to deal with the crisis. Therefore, the price will eventually rise to
a very high speed to keep up with the currency surplus. This is called demand-pull, because the price is
high demand forced upward.
Another common cause of inflation is to increase the production cost, which leads to increase in the
price of the final product. For example, if the raw material price increases, which will lead to increased
production costs, which in turn led to the company to raise prices in order to maintain stable profits.
Rising labor costs could lead to inflation. Since the workers are demanding higher wages, companies
often choose other costs passed on to their customers.
Inflation can also be caused by international lending and debt. As the state to borrow money, the
interest they have to face, which in the end lead to price increases, as a way to keep up with their debt.
The rate of decline in inflation may also lead to deep, because the government will have to deal with
differences in the import / export levels.
Cause of short-term unemployment
Natural unemployment is the level of unemployment that is inevitable in the long-term performance of
an economy. This is unemployed, is independent of the business cycle and the type of short-term
economic fluctuations. Since 1960, the term has been in use, when it is used invalid long relationship
between inflation and unemployment. Then the actual activity rate of unemployment is a hypothetical
assumption that the market is competitive and rapidly adapt to changing conditions....