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Unemployment and inflation are two well-known topics that are often discussed. However, many people do not know that unemployment and inflation have strong influence on each other. Unemployment basically means that number of people who have no job or seeking employment. Conversely, a constant increase in over all “price level” is called inflation (Colander, 157). Unemployment and inflation are both examples of macroeconomic instability. This report will discuss unemployment and inflation’s relationship, affects, and their results on our economic system, our society, and on the population on the basis of the chapter six “Unemployment and Inflation” from the Real World Macro by Dollar and Sense Collective.

According to the article “The Natural Rate of Unemployment”, Pollin discussed the idea of the natural rate of unemployment, which is also called NAIRU “Non-Accelerating Inflation Rate of Unemployment.”¹ Many orthodox economics think that if the unemployment rate decreases from the natural rate of unemployment, which according to economists is a little below than 6%, can cause inflation.¹ In 1968, Milton Friedman, a Nobel Prize winning economist, invented the theory of “Natural Rate of Unemployment” and later the theory was adjusted by mainstream economists and named the “Non-Accelerating Inflation Rate of Unemployment” or NAIRU.¹ That is an achievable rate or target that does not cause to increase inflation.¹ Friedman also said that NAIRU changes over time, it contingent upon workers, unions and capitalists.¹

When unemployment rate goes down, it increases workers demand of increasing wages. ¹ As compared to the theories of Robert Gordon, Karl Marx, and Michael Kalecki, all were agree that although NAIRU changes over time, but capitalists purposely avoid full employment because it prevent workers to demand more than they deserve and from Friedman view mass unemployment results when workers’ demand increase from their productivity. ¹ After understanding the class conflict, some important issues can be seen clearly. For instance, workers’ demands of increasing wages do not cause inflation directly because power is in the hands of the “capitalists” not the workers. ¹ In contrast, Inflation occur when capitalists fulfill their workers’ demand of higher wages by increasing the prices on the goods and services.¹

From the 1990’s workers could not increase in their wages, therefore, Pollin said worker’s well-being can not be determined by the full employment, and the United States need a well-developed policy to maintain full employment at living wage while controlling the inflation.¹

According to the article “When Wage Hikes Don’t Mean Price Hikes”, written by Arthur Macewan, there are certain circumstances where employers don’t pass “wage hikes” to their customers.² For instance, according to the “Law of Demand” the quantity of demand decreases when the prices of goods increase (Colander, 91). For this reason, employers have more chances of decreasing their sales and revenue, thus they don’t pass income increase to their consumers.² When workers’ incomes increase, it causes most of the goods and services’ demand increase.² However, on the other hand, firms and employers are also consumers, when companies increase their employee’s wages, it affect companies “purchasing power”.² As a result, prices do not increase. In addition, there are some factors that can cause employers to increase their prices to maintain the profits are “government monetary authorities, minimum wage policies, and strength of labor unions.”²

Bryan Synder’s article “What are the real cost of inflation and to whom”, states that the inflation is a risk to the interest of large investments of the financiers, and this is a view of the financiers.³ However, their view will not be true if there is an average rate of inflation.³ For instance, during the 1953 to 1973, the inflation was very high, but the rate of the growth was also remained high in the Japan, Korea, Israel, and also in some other countries.³ Its mean that inflation and growth could be parallel, and average inflation doesn’t hurt long term growth.³

According to the Thomas Michl of Colgate University, the real cost of inflation is a decrease in the real income, but it can be corrected.³ For instance, the rate of inflation fluctuate by the time, therefore, government established COLA (Cost of Living Adjustment).³ Which is an adjustment made to the social security structure to adjust the benefits, so the people’s “fixed Social Security benefit” could not be spoil by the inflation.³ Additionally, increase in the wages mean workers’ have to pay more income tax, thus to adjust the wages in order to balance with the inflation, the government has build “Tax Reform Act” to solve this problem.³ High inflation devastates the valid worth of workers’ income and investors’ deposit.³ Consequently, average inflation does not affect to the business and individuals’ investment and slows down economics growth³.

The article “Is The “New Economy” More Productive?” by Phineas Baxandall is “sorting fact from fiction” of the old and new economy. The information technology played a great role into the new economy, particularly, in the gain of productivity. Productivity “measure the output per worker” (Colander, 190). And the productivity measured up by the Gross Domestic Product (GDP) Gross Domestic Product is “the market value of final goods and services produced in an economy, stated in the prices of a given year” (Colander, 141). In recent decades, information technology development has helped to enhance the productivity and so economy. On the other hand, in the 1980’s average growth of the GDP was 2.9%, and in the 1990’s it was 3.1%, if we compared 1980’s with 1990’s average growth of the GDP, there was not so much difference. And also, from the 1990’s, average workers only gain minimum of 0.5% increased in their wages each year. However, the technology has increased the workers’ expenses because in order to be more productive, their need to have new technology has become essential for them. In relation to the new economy, the productivity will continue to increase as the information technology continues to grow. Therefore, this will be necessary to pay attention to the education and industry of the information technology.

Arthur Macewan explained in his article “Productivity, Bargaining Power, And Wages” that productivity is the amount of output over per unit of input, and the workers or unions’ power of arguing for their demands called bargaining power. The bargaining strength of workers in last ten years has weakened due to the government policies. Workers at the lowest level are affecting most from this.  Moreover, outsourcing the jobs is also declining the worker’s bargaining power and particularly workers who are already getting less are facing the competition with workers who are even being paid lesser than them.  For example, in East Asia and Mexico the worker’s income is much lower than the  The technology change is also an issue toward workers who are missing skills that are essential for their jobs.  According to the past evidences, productivity increase is greater than the wages increase, so “It would be hard to explain the rise and fall of wages—by the changes in productivity.”

Two important things, I did not know before reading the chapter “Unemployment and Inflation” was how unemployment and inflation affect each other and the second thing what is NAIRU (Non-Accelerating Inflation Rate of Unemployment). I learned that there is a tradeoff between inflation and unemployment, therefore, low unemployment and low inflation is really hard to happen at the same time. As I mentioned before, when unemployment falls, workers demand for higher wages. Therefore, the companies or firms raise their prices to cover up their profits; as a result, the acceleration of inflation occurs. I never thought about this point of view, so it really amazed me. There is a theory called NAIRU “Non-Accelerating Inflation Rate of Unemployment”, which is to stabilize the unemployment and inflation rate at the positive level. This theory was also new for me. Under this theory, when employment goes below the “natural rate”, which is also adjustable over the time, inflation begins to rise. Its means unemployment at some point is favorable to the society. I realized that it is not just the problem of the government polices, but it is also a problem of individual’s aggregate demand. We as individuals always demand what is good for us without thinking about what is good for the whole society, and that creates instability to our society.

All the authors almost discussed about the same period of 1990’s to 2000’s in the chapter of “Unemployment and Inflation” of the Real World Macro. In this period economy was apparently on the right track. The economic growth was increasing progressively. The technological development higher the productivity and also enhanced the globalization. The stock market was booming and investors were willing to invest in this significant growth. In this period inflation was pretty stable, and even in the 1997, according to the Robert Pollin’s Article “The “Natural Rate” Of Unemployment”, the unemployment rate in the was dropped to 4.9% after longs decades, but the inflation was stable and controllable. However, I would like to change the two things in our system. Firstly the class conflict and secondly the fair wage system, which is obviously related to the class conflict. According to this chapter, one thing was pretty clear that class conflict exits and dominates the poor member of the society. Capitalist do not let this happened because the full employment increases workers demands of higher wages. If the productivity is growing, then workers should have fair demands of increasing their wages, and capitalist should not evade workers from getting what their worth is.

There is a need to stabilize full employment with low inflation and fair wages. In the last decades, productivity was higher, but workers could not gain in their wages as they should be. There is definitely a policy change needed because there is instability between the productivity gain and distributing of fair income. The government should impose a policy where full employment, productivity gain and distribution of income remain stable. I would suggest that government should control the class conflict because this is the main reason of instability. If government tries to agree those capitalist, who increase their profits by lowering the cost of workers income or who has a fear that low unemployment will increase workers demand of rising wage, by making a deal or policy of a stable increase that can solve this problem for both the employers and employees. In the chapter “Unemployment and Inflation” all the writers have same explicit suggestion on about developing a policy that helps to maintain the productivity growth with fair distribution of income. For instance, the writer, Robert Pollin, clearly suggest that in the United States well developed policy is required, where full employment can be control and stable with fair income, and also where healthy union can be build to protect the right of the workers such as, living wages, reasonable job securities, and a healthy work environment.¹
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One paragraph at a time - this editor is very tedious and difficult to use.

Unemployment and inflation are two well-known topics that are often discussed. However, many people do not know that unemployment and inflation have a strong influence on each other. Unemployment basically means that number of people who have no job or are seeking employment. Conversely, an constant increase (inflation is not constant!) in the overall over all "price level" is called inflation (Colander, 157). Unemployment and inflation are both examples of macroeconomic instability. This report will discuss the relationship between unemployment and inflation relationship, their effects, and their results (impact?) on our economic system, our society, and on the population. This report is based on on the basis of the chapter six "Unemployment and Inflation" from the Real World Macro by Dollar and Sense Collective.
According to the article "The Natural Rate of Unemployment", Pollin discussed the idea of the natural rate of unemployment, which is also called NAIRU "Non-Accelerating Inflation Rate of Unemployment."¹ Many orthodox economists think that if the a decrease in the unemployment rate below decreases from the natural rate of unemployment, which according to economists them is a little less than below than 6%, can cause inflation.¹ In 1968, Milton Friedman, a Nobel Prize winning economist, invented the theory of "Natural Rate of Unemployment". and Later the theory was adjusted by mainstream economists and named the "Non-Accelerating Inflation Rate of Unemployment" or NAIRU.¹ That is an achievable rate or target that does not cause to increase inflation to increase.¹ Friedman also said that NAIRU changes over time, it is contingent upon workers, unions, and capitalists.¹
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I had a difficult time making sense out of the last sentence. Comsider revising it.

When the unemployment rate goes down, it increases workersdemand for higher of increasing wages. ¹ As compared toThe theories of Robert Gordon, Karl Marx, and Michael Kalecki, all were agreed that although NAIRU changes over time, but they believed that capitalists purposely avoid full employment because it prevents workers to from demanding more than they deserve. and from Friedman's view , on the other hand, was that mass unemployment results when workers demand increase from their productivity and demand higher wages. ¹
After understanding the class conflict, some important issues can be seen clearly. For instance, workers' demands of increasing wages do not cause inflation directly because power is in the hands of the "capitalists" not the workers. ¹ In contrast, inflation occurs when capitalists fulfill their workers' demand of higher wages by increasing the prices on the goods and services.¹

From the 1990's workers could not increase in their wages, therefore, Pollin said that the workers' well-being can not be determined by the full employment, and the United States needs a well-developed policy to maintain full employment and at living wage levels while controlling the inflation.¹

According to the article "When Wage Hikes Don't Mean Price Hikes", written by Arthur Macewan, there are certain circumstances where employers don't pass "wage hikes" to their customers.² For instance, according to the "Law of Demand" the level quantity of demand decreases when the prices of goods increase (Colander, 91). For this reason, employers have more chances , in order to prevent of decreasing their sales and revenue, thus they do not pass income (cost?) increases on to their consumers.² When workers' incomes increase, it causes a general increase in the demand for most of the goods and services' demand increase.² However,On the other hand, firms and employers are also consumers, and when companies increase their employees' wages, it affects the companies "purchasing power".² As a result, prices do not increase. In addition, there are some factors that can cause employers to increase their prices to maintain the profits. (Examples or These) are "government monetary authorities, minimum wage policies, and strength of labor unions."²
I had trouble with the last sentence - it seems to contradict your previous point that inflation does not slow economic growth.
Bryan Synder's (Snyder's?) article "What are the real costs of inflation and to whom", states that the inflation is a risk to the interest of large investments of the financiers, and this is a view of the financiers.³ However, their view will not be true (does not hold?) if there is an (consistent?) average rate of inflation.³ For instance, during the period 1953 to 1973, the inflation was very high, but the rate of the growth was also remained high in the Japan, Korea, Israel, and also in some other countries.³ Its meant that inflation and growth could coexist be parallel, and a high average inflation does not hurt long term growth.³

According to the Thomas Michl of Colgate University, the real cost of inflation is a decrease in the real income, but it can be corrected.³ For instance, the rate of inflation fluctuates over by the time, therefore, the government established COLA (Cost of Living Adjustment) to be applied to benefits payments so that Which COLA is an adjustment made to the social security structure to adjust the benefits, so the peoples' "fixed Social Security benefit" could not be spoiled (diminished in real terms?) by the inflation.³ Additionally, an increase in the wages meant that workers' would have to pay more income tax, thus to adjust the wages in order to balance with (compensate for?) the inflation, the government has built (enacted?) "Tax Reform Act" to solve this problem.³ High inflation devastates the valid true worth of workers' income and investors' deposits.³ Consequently, average inflation does not affect to the business' and individuals' investments and (or?) slows down economics growth³.
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I have spent a lot of time on your report. You can use my suggestions on the earlier paragraphs to improve the rest of it.
In his The article "Is The "New Economy" More Productive?" by the author, Phineas Baxandall, is "sorting fact from fiction" in of the old and new economy. The Information technology has played a great role into the new economy, particularly, in the gain of productivity. Productivity is the "measured the output per worker" (Colander, 190). And the overall productivity can be measured up by the Gross Domestic Product (GDP), Gross Domestic Product is "the market value of final goods and services produced in an economy, stated in the prices of a given year" (Colander, 141). In recent decades, information technology development has helped to enhance the productivity and so (resulting in higher GDP?) economy. On the other hand, in the 1980's average growth of the GDP was 2.9%, and in the 1990's it was 3.1%, so if we compared 1980's with 1990's average growth of the GDP, there was not so much difference. And also, from the 1990's, average workers only gained minimum (? a minimal )of 0.5% increased in their wages each year. However, the technology has increased the workers' (don't you mean the expense of doing business? Workers do not pay for capital equipment) expenses because in order to be more productive, their need to have new technology has become essential for them (the workers or the capitalists?). In relation to the new economy, the productivity will continue to increase as the information technology continues to grow. Therefore, it this will be necessary to pay attention to the workers' education (or skills) and industry of the information technology. (who needs to pay attention to industry?)
Thank you so much for your help and consideration:)

I am feeling relief now. My prof. returned my draft last week, and I was very upset.
Because he took off my full 4 point in the grammer part. And he asked me to take help with somebody who has good english skills. I am new in America and i don't have many friend who can help me.

I really appreciate that you helped me. I will fix my mistake as you mentioned. I will also try to fix the rest assignment.

Thank you again:)