Inflation and Unemployment in the United States

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Table of Contents

Introduction
The Labor market and income
Unemployment and Inflation
Conclusion
References

Introduction

In the 21st century, there are so many issues in the economy of the United States. Inflation, unemployment, technology and other issues are increasing. This paper will present a discussion on two questions regarding the demand for skilled and unskilled workers, minimum wages, unemployment, inflation, and barter trade. Assessments, predictions and justifications will also be given.

The Labor market and income

Formulate two reasons why the demand for highly skilled workers has increased relative to the demand for less-skilled workers. Predict whether this type of demand will change in the next 10 years. Provide support for your response.

There are so many immigrant workers who are highly skilled and the economy of America has moved into the technological age. Therefore, more high skills are required to sustain it. This demand will not change in the coming 10 years. This is so because the rate of immigration is high and it is expected to rise even more in the coming 10 years.

This will increase the number of immigrant skilled workers within the United States. Also, the economy is becoming more and more technologically oriented. This is increasing the demand for skilled workers by the day as opposed to the unskilled. In the next ten years, the economy will have grown more technologically hence the higher need for highly skilled workers (Aaronson, Mazumder, & Schechter, 2010).

Give your opinion on whether or not the poor benefit from increases in the minimum wage. Justify your response.

The poor do not benefit from any increase in minimum wage. The employee receiving an average minimum wage does not fall among the poor. Many of those getting minimum wage increases earn over 3 times what those under the poverty line earn.

If for example the minimum wage is increased to $ 7.25 per hour, only 12.7 percent of this would benefit poor families. 63 percent of these benefits would be taken up by those families with income above the poverty line by 2 times while 42 percent would benefit families with an income of 3 times above the poverty line. Average benefit for all the families is almost equal (Andereyeva, Long, & Brownell, 2010).

Unemployment and Inflation

Predict whether the years following the next presidential election will bring us inflation, deflation, or relatively stable prices. Provide support for your response.

After the next presidential election, the inflation rates will go down. Currently the rate of unemployment is high at about 8 percent.The rates of unemployment are high because Americans are yet to choose between Obama and Romney. When one of them is voted in, there is a possibility that rates of unemployment will drop and this will bring inflation down as well (Luojia, and Toussaint-Comeau, 2010).

Analyze how inflation could occur in a society that relies exclusively on barter versus money.

Inflation could occur in a barter trade society when the supply of certain commodities is high and their demand is low. This would mean that small quantities of the other commodities would exchange with the abundant items for very large quantities. When the supply of a particular product is low its demand rises and therefore other commodities will be exchanged with it in large amounts for a small amount of the scarce commodity (Luojia, and Toussaint-Comeau, 2010).

Speculate what form of inflation would occur and how you would recognize it. Provide support for your response.

Demand pull inflation would arise. This can be recognized through the low supply of certain important commodities which would then lead to an acute demand for those commodities. Small measures of such commodities would fetch larger measures of the other commodities (Heyne, Boettke, and Prychitko, 2010).

Conclusion

In this essay the issue of inflation and unemployment in the United States has been examined. Highly skilled workers are on high demand because of changing technology. Minimum wage increase does not benefit the poor. Inflation may drop following the coming presidential election since unemployment is expected to go down. Supply and demand would bring about inflation in barter trade societies.

References

Aaronson, D., Mazumder, B., & Schechter, S. (2010). What is Behind the Rise in Long term Unemployment? Economic Perspectives, 34(3/4), 28-51.

Andereyeva, T., Long, M., & Brownell, K. D. (2010). The Impact of Food Prices on Consumption: A systematic Review of Research on the Price Elasticity of Demand for food. American Journal of Public Health, 100(2), 216-22.

Heyne, P., Boettke, P. J., & Prychitko, D.L. (2010). The Economic Way of Thinking. (12^th ed.). Upper Saddle River: Pearson Prentice Hall.

Luojia, H., &Toussaint-Comeau, M. (2010). Do Labor Market Activities Help Predict Inflation? Economic Perspectives, 34(3/4), 52-63.

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Inflation and Unemployment in the United States

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