Interrelationships between economic growth, unemployment and inflation Research Paper

Interrelationships between economic growth, unemployment and inflation - Research Paper Example There are four phases in the business cycle depending on which the effects on economic growth, inflation and unemployment change. During the period of a peak or a temporary maximum stage of the business cycle, the rate of inflation is high while the unemployment rate is low. During a recession that reflects on a decline in the total production, inflation lowers and rates of unemployment increase. Unemployment rises to a height or peal during the period of trough that refers to the bottom stage of the period of recession. This phase also reflects on lower rates of inflation. Recovery or expansion is the period when production increases again, and during this stage the rates of unemployment decline and after a certain period of time the inflation rate rises (Chapter 9- Business Cycles, Unemployment, Inflation). Inflation is such a phase that leads to increase in the costs of goods and services thereby affecting the entire economy of any country. The economy is never benefitted with ris ing inflation. However it has been obtained that governments in general often try to take suitable measures to minimize the effects of inflation, when they can study expected rising inflation in the economy. The growth in an economy and the rate of inflation move parallel and hence they cannot be expected to meet. The value of money reduces as a result of inflation thereby making the lives of people in any country difficult. The inflation and the growth in economy being inapt to each other affect different sectors of an economy that include the consumer price index, and the gross domestic product (Inflation and Economic Growth). Also, the effects of inflation and economic growth are found in...This research paper focuses on an analysis, comparison and contrast of economic growth, unemployment and inflation as associated with micro and macro economics of the world and in any individual country. Economic growth, unemployment and inflation are the factors of macroeconomics of any country. Economic growth refers to the capability of the economy of any country to turn out growing capacities of goods and services Economic performances of different countries vary at different points of time. The performance of an economy is best understood through the analysis of the indicators where economic growth, unemployment and inflation are included as major factors. A better economic state of a country may be realized if a higher percentage of its workforce is found to be doing well. In this regard, the quantity and quality of the jobs are significantly necessary to be considered. Unlike unemployment and inflation, the economic growth of a country is measured in terms of GDP or gross domestic product. It represents the total production that a country generates in a certain period of time, say a year. It can be calculated by summing up the total output, income or expenditure that occurs within a country in that particular time period. Real GDP represents the figure that has been obtained by adjustment for inflation. The percentage rise in output represents the nominal GDP through which the economic performance of a country may be determined. The association between growth in real GDP and unemployment is significant for policy makers.