Presentation By:

Syed Tahseen Raza

Roll No 01
M.com 1 st
Subject:
Principles of Economics
Presentation Topic:
Unemployment and Inf lation
o Definition of Unemployment
o Three Important Categories
o Types of Unemployment
o Natural Rate of Unemployment
o Reasons of Unemployment
o Consequences of Unemployment
o Solution for Unemployment
o Calculation of Unemployment
 Unemployment Refers to the situation where the
people of country do not find work to earn their
livelihood.

 The situation in which people do not find the work

despite of their willingness to do work.
 Measuring unemployment is the job of BLS(Bureau of
Labor Statistics) which is part of Department of Labor.
 BLS(Bureau of Labor Statistics) places each adult (age
16 and older) into one of three categories.
1) Employed Labor Force
2) Unemployed
3) Not in Labor Force
 In Pakistan there is Pakistan bureau of statistics.
1. Structural Unemployment
2. Seasonal Unemployment
3. Frictional Unemployment
4. Cyclical Unemployment
5. Technological Unemployment
 In Every Economy the 100% employment is impossible
so according to the economist some people will be
unemployed in each and every economy and that is
called as natural rate of unemployment .

 Natural rate of unemployment is between 4-6% (in

some books 2.5-6%).

 It is also called as Full Employment.

1. Increase In Population.
2. Rural-urban Migration.
3. Downsizing.
4. Lack Of Capital.
5. Lack Of Credit Facility.
6. Seasonal Variation.
7. Technology Advancement.
8. Lack Of Skills Work Experience.
9. Lack Of Education.
1. Rise In Criminal Activity.
2. Violence.
3. Drug Addiction.
4. Terrorism.
5. Social And Moral Evils.
1. Establishment Of Small And Medium Scale Industries.
2. Vocational And Technical Training Centers.
3. Encouragement Of Construction Industry.
4. Internship Programs.
5. Provision Of Easy Credit.
 Unemployment rate is the ratio of the number of
people unemployed to the to the total number in the
labor force .

 Unemployment Rate= Unemployed

X 100
Labor Force

 Example: If labor force is 15 million and 3 million are

unemployed then unemployment rate is
 3 million/15 million x 100 = 20%
 The labor force participation rate is the ratio of labor
force to the population (age of 16 or above).

 This Basically shows the portion of population that is

contributing to labor force.

Labor force Participation= Labor force

X 100
Total Population above 16 age
o Definition Of Inflation
o Types Of Inflation
o Inflation Types On Basis Of Speed
o Cause If Inflation
o Calculation Of Inflation
o Monetary Measures To Control Inflation
o Fiscal Measure To Control Inflation
The Persistent increase in the general price
level of goods and services in a economy of an
country is known as inflation.

When too much money chases too few goods is

called inflation.
oGeneral Price= We Take Average of Basket of goods(300-500 Items).
oPersistent= ‫نہ کہ ایک یا دو دن کا اتار چڑھاؤ۔‬، ‫دھیرے دھیرے پرائزز کا بڑھنا‬
 1. Demand Pull Inflation
(Related With Demand Side)

2. Cost Push Inflation

(Related With Supply Side)
1. Population Growth
2. Deficit Financing
3. Increase In Wages
4. Foreign Remittance
1.Increase In Cost Of Raw Material.
2.Increase In Wages Rate.
3.Decrease In Production.
4.Imported Inflation.
5.Indirect Taxes.
1.Creeping or Mild inflation
(between ,less than 3% to 3.00% a year)
2.Walking inflation
(Between 3.01% to 10.00% a year )
3.Galloping
(10.00% or more a year)
4.Hyper inflation
(50% a month)
 There are various formulae for calculating inflation rate.
1. WPI (Whole sale price index)
2. SPI (Sensitive Price Index)
3. CPI (Consumer Price Index)

 Most Common formula is CPI ( Consumer Price Index)

CPI = Current Price level – Previous Price Level

Previous Price Level X 100
 1.Monetary Policy
a) Made and adopted by Central Bank
b) To manage the money supply in country

2.Fiscal Policy
a) Made by Government
b) To manage the public Revenue and Public Expenditure
 1.Central bank reduces the money
supply by selling bonds etc.

2.The central bank raises its interest

rate for the commercial banks.
 1.Govt. can Reduce public expenditure

2.Govt. raises the direct tax to discourage

the consumption thus aggregate demand for
goods falls.
To discuss the relationship
between unemployment and
inflation according to Phillips
curve, whether application or
not, in Pakistan.
 There is tradeoff between inflation and unemployment
in the short run.

 When unemployment decrease, inflation increases and

vice versa.

 In the long run there is no tradeoff between

unemployment and inflation rate.
This is the combination of two words.
1. Stagnation
2. Inflation
The condition of the economy where the
price increase in economy with high
unemployment.
Reason: Decrease in Aggregate Supply.
Thank
You
You can get notes from me.