PRINCIPLE OF ECONOMICS

Principle of Economics

Principle of Economics

1- One tradeoff society faces is between efficiency and equality. Elaborate each term with suitable examples. If the government in your country redistributes income..?

Ans. The short run tradeoff between the rate of inflation and the rate of unemployment. The curve is represented on a graph and is relatively easy to read. Lower unemployment rates, which are measured as movements to the left on the horizontal axis of a graph, are directly related with higher rates of inflation, which are measured as movements upward on the vertical axis of a graph.

After studying and understanding the relationship between inflation and unemployment, one can start to see just how important these two separate economic issues actually are. Even though these two occurrences in our economic environment may seem a little difficult to fully understand, they are well worth investing time into. By learning more about unemployment and inflation, one can get a little better understanding of how our economy works. What this is basically saying is that inflation is a rise in the general level of prices in an economy. After comprehending what these two economic issues actually are, one can begin to understand how inflation and unemployment are related.

When unemployment rates fall (more people have jobs), inflation rates almost immediately increase. This happens because of a simple chain reaction. When firms are hiring more and more people, these people are once again able to purchase goods and services. The firms providing these goods and service realize this and increase the price level because they know the public will pay these newest prices. When there is more money in the economy, products will naturally be more expensive.

4- Critically review the private solutions to externalities sometimes do not work? You are required to bring examples and academic rform ...