Inflation

Inflation is an economic term that measures the general level of the prices of
the goods and the rising services, as a result we achieve a decreasing purchasing
power. Inflation is an economy world-wide phenomenon that concerns the
economic medium exchange. There are different types of calculating the inflation
rate. One of them being: using the CI !consumer price index" that is the measure
of the prices of the mar#et bas#et: Inflation for year $ % !CI$-CI&"'CI&
x&((.This is the type of inflation expressed on consumers. )ut producers also
experience an inflation upon them, that indicator is cold a producers product index
!I".
*nemployment occurs when a person who is a part of the labor force of a
country doesn+t want or have the possibility of finding a ,ob. In order to calculate
the unemployment rate, which is also a measure of an economies health, is:
!*nemployed people'-abor force people" x&((
Tac#ling the problem of which one of these two economic health indicators is
more important and which of them needs to have more impact from the
government. .ach of these two has their ups and downs. *nemployment ,
especially the structural unemployment caused by the introduction of the minimum
wages that creates a surplus because of the low supply of labor places and the big
demand from the employees. /s the inflation rate depreciates the value of the
money as the prices go up, also the promotions of our salaries, ban# deposit
interest rates, all of these are decreased by the inflation. 0etting the real rates by
subtracting inflation from the nominal ones !real interest%nominal interest-
inflation rate".
1till the opinion pools from the *1 decide to thin# that inflation is a much more
vigorous problem than unemployment. Classical economists or 1ay+s law named
after the 2rench economist, 3ean-)aptiste 1ay !&454- &67$" might be the approve
of this theory , as he states that the mar#et doesn+t have to fear of unemployment
and surpluses as there is supply that will create its own demand , but this theory
has been crushed &(( years later .
One of the strongest argument can be the fact that inflation rate decreases the
productivity of labor that can also cause unemployment, so by solving the inflation
rate problem we could be able to solve both of the 8uestions, but only in the long
run, because of the 9I-I1 C*:;., !that states that unemployment is inverse
proportional to inflation in the short run. /s inflation increases unemployment
decreases and vice versa".
2inally I can say that inflation is, was and will be a ma,or problem in all around
the world

(Parfenii Ion D-134)