UNEMPLOYMENT AND INFLATION BUSINESS CYCLE UNEMPLOYMENT AND INFLATION

Business Cycle A business cycle refers to fluctuations in the economy.

THEORIES OF BUSINESS CYCLE

EXOGENOUS THEORIES – Forces outside the economic system. Example of these forces are: wars political development natural disaster, or major innovations.

ENDOGENOUS THEORIES – Forces within the economic system cause fluctuations in economy. Example are: Accelerator Multipliers Innovation, or Monetary Policies

Business Cycle

Four Phases of the Business Cycle 1. A peak is when business activity reaches a temporary maximum, unemployment is low, inflation high. 2. A recession is a decline in total output, unemployment rises and inflation falls. 3. The trough is the bottom of the recession period, unemployment is at its highest, inflation is low.

4. Expansion (recovery) is when output is increasing, unemployment begins to fall and later inflation begins to rise. Unemployment increases during business cycle recessions and decreases during business cycle expansions (recoveries). Inflation decreases during recessions and increases during expansions (recoveries).

The biggest economic problems of business cycle are unemployment and inflation. These problems affect almost all sectors of the economy and society, particularly the low-income groups.

Phillips Curve

Twin Problems that arise from business cycle: unemployment and inflation A person is considered unemployed if he is at least 15 years old, willing and able to work, but cannot find work. Unemployment is not only considered an economic problem (loss of job, lack of income, inability to feed one’s family, etc.) but is also a social problem. Unemployment can lead to petty crimes or outright hold-ups or robberies.

An underemployed is an employed person who works for less than 40 hours per week, despite the fact that he wants to work for more hours. Visible underemployment is defined as the number of people working less than 40 hours per week and wanting additional work.   Invisible underemployment is defined as the number of people working 40 hours or more per week and still wanting additional work.

Underemployed Refers to employed persons who express the desire to have additional hours of work in their present job or an additional job, or have a new job with longer working hours.

Employed This refers to persons in the labor force who are reported either as at work or with a job or business although not at work. Persons at work are those who did some work, even for an hour during the reference period.

Some Reasons Why Philippine Jobless Rate is High The Philippines has long been a labor exporting market. About 2,500 Filipinos leave the country on a daily basis to seek for greener pastures abroad and better provide for the needs of the family, notwithstanding the social impact of this Filipino diaspora.

Unemployment rate in the country stands at around 7 to 8 per cent Unemployment rate in the country stands at around 7 to 8 per cent. In comparison with our Asia-Pacific neighbors, Malaysia has 3.4 percent, 8.9 percent in Indonesia, 2.3 percent in Thailand, and 3.4 percent in Singapore. In South Korea, it was 3.5 percent, Taiwan, 4.3 percent, China, 3.9 percent and Vietnam, 5.6 percent. Most of the unemployed in the Philippines are fresh graduates with about 400,000 added to the labor force each year. But a significant ratio of them also are workers who were retrenched from their jobs or whose employment contracts were not renewed. So let’s identify the reasons why unemployment in the Philippines is high.

Oversupply of labor force on popular careers The country’s education system continues to produce college graduates whose skills don’t necessarily fit with what is in demand in the job market.

Lack of quality graduates

Inability to take on available jobs or seize opportunities Apparently clueless job applicants

Types of Unemployment Structural Unemployment - Occurs when workers are laid off and no longer possess the skill set required to work in the field. This may occur as a result of technology replacing workers. With structural unemployment, workers have permanently lost their jobs in the field. An example of structural unemployment would be the replacement of auto-workers by mechanized assembly lines. Frictional Unemployment - The temporary unemployment that results from people moving between jobs, careers, and/or locations. Frictional unemployment is typically a short-term unemployment situation. An example of frictional unemployment would be a graduating college senior looking for a job in the “real world.”

Cyclical Unemployment - Results due to changes in the business cycle Cyclical Unemployment - Results due to changes in the business cycle. At the peak of business expansion, cyclical unemployment is zero. In the final stages of business contraction, cyclical unemployment is high. A common example of cyclical unemployment is an employee who loses his/her job due to cuts in a company. Seasonal Unemployment - Occurs when people are out of work during the “off-season.” This may include landscapers, construction workers, and/or other outdoor jobs in cold winter climates. Oftentimes, workers involved in seasonal unemployment hold a different job during the “off-season.”

brain drain Brain Drain is the emigration of highly trained or intelligent people from a particular country.

WAG MONG IPAUBAYA SA GOBYERANO O SA EKONOMEYA O SA SKUL ANG BUHAY NA GUSTO MO. KAYA MONG ISULAT ANG SARILI MONG LIFE STORY.