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Inflation, Recession & Unemployment

The document discusses key economic concepts including inflation, recession, and unemployment, outlining their definitions, causes, consequences, and potential measures to mitigate them. It also highlights the role of trade unions in securing better wages and working conditions for employees, as well as the collective bargaining process aimed at negotiating improvements for workers. Overall, it provides a comprehensive overview of how these economic factors impact individuals and the economy as a whole.

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Jerome Nisa
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6 views4 pages

Inflation, Recession & Unemployment

The document discusses key economic concepts including inflation, recession, and unemployment, outlining their definitions, causes, consequences, and potential measures to mitigate them. It also highlights the role of trade unions in securing better wages and working conditions for employees, as well as the collective bargaining process aimed at negotiating improvements for workers. Overall, it provides a comprehensive overview of how these economic factors impact individuals and the economy as a whole.

Uploaded by

Jerome Nisa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Economics 11 B

Topic: Inflation
Inflation refers to the general increase in the price level of goods and services in an economy
over a period of time.
Types/Causes of Inflation:
i. Demand-pull
Occurs when the overall price level rises due to an increase in aggregate demand, surpassing the
economy's ability to supply goods and services.
ii. Cost-push
Occurs when the overall price level rises due to an increase in production costs, such as wages,
raw materials, or taxes.
iii. Imported inflation
Occurs when an increase in the prices of imported goods and services leads to higher overall
price levels in the domestic economy.
iv. Monetary inflation
Refers to a sustained increase in the money supply in an economy.
Consequences of inflation:
i. Fall in real income by fixed-income earners.
ii. Borrowers gain at the expense of lenders.
Some possible measures to reduce inflation:
i. Deflationary Fiscal policy
ii. Deflationary monetary policy

Topic: Recession
A recession refers to a significant decline in economic activity within a country or across the
world, lasting for an extended period. During a recession, there is a decrease in economic
growth, employment levels drop, consumer spending declines, and overall business activity
contracts.
Causes of a Recession
i. Trade or business cycle
ii. Contraction of National Output
Consequences of Recession:
i. The general reduction in output by firms
and incomes earned by households
ii. Increase in unemployment.
Measures to reduce a recession:
i. Reflationary fiscal policy
ii. Reflationary Monetary policy

Unemployment refers to the condition in which individuals who are willing and able to work are
actively seeking employment but cannot find suitable jobs.
Types/causes of unemployment:
i. Frictional
ii. Seasonal
iii. Structural
iv. Cyclical
v. Classical/Real wage
vi. Technological Unemployment
Frictional: Temporary and voluntary
unemployment due to job transitions.
Seasonal: Unemployment tied to predictable seasonal variations in demand.
Structural: Caused by a mismatch of skills and job opportunities.
Cyclical: Arises from economic downturns and business cycles.
Classical/Real Wage: Results from wages above market equilibrium level.
Technological Unemployment: This type of unemployment occurs when advancements in
technology lead to the replacement of human workers with automation and machines.
Consequences of unemployment
i. Loss of tax revenue to the Government
ii. Social fallout
iii. Wastage of resources (idle resources)
iv. Decrease in the quality of life of the unemployed
Measures to reduce unemployment:
i. Reflationary fiscal policy
Reflationary Monetary policy

The role of trade unions in a free market economy


Trade unions play an important role in the free market economy. Here are their
functions:
• Trade unions secure higher wages for their members.
• Trade unions secure improved terms and conditions of employment – safer, healthier working
environments (airy, well-lit, clean and cool rooms), protection of workers’ privacy, hours of
work, time-off periods, maternity leave, holiday entitlement (with pay), promotion, pay when on
sick leave, pension plans, opportunities for training and job security.
• Trade unions can hold training sessions for workers. These might be work related, or could be
motivational lectures or education on the rights of workers. This increases productivity and
prevents the workers from being exploited by the employer.
• Trade unions ensure that there is equity of treatment of all workers.
• Trade unions contribute to the development of the country as workers bargain in an organised
fashion. There is communication between workers and management. Workers negotiate in an
orderly way. There is little or no disorder. However, there might be industrial unrest or the threat
of industrial unrest. When there is industrial unrest, it leads to a fall in productivity. Generally,
though, trade unions contribute to stability and economic progress.
• Trade unions can also meet with government (the Ministry of Labour) to represent the workers’
views with respect to issues that affects workers.
The Collective Bargaining Process
Collective bargaining is the process by which trade union officials, representing workers, meet
with employers to negotiate for higher wages and better terms and conditions of work.
Collective bargaining aims to secure for workers:
• higher wages and incomes, including bonuses and overtime benefits
• improved terms and conditions of employment.

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