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Keynes summarizes the view of classical economists that the economy should be self-adjusting if wages are fluid, and that they blame rigidity in wages for problems like unemployment. He disagrees with what he says is the orthodox view, based on the quantity theory of money , is that wage reductions have a small effect on aggregate demand, but ...
Further study led Phelps to believe that it is not a transitory phenomenon but the effect of changes in equilibrium unemployment. [ citation needed ] During the following years, Phelps tried to build a theory to determine endogenously the natural rate of unemployment.
High and the persistent unemployment, in which economic inequality increases, has a negative effect on subsequent long-run economic growth. Unemployment can harm growth because it is a waste of resources; generates redistributive pressures and subsequent distortions; drives people to poverty; constrains liquidity limiting labor mobility; and ...
Economics (/ ˌ ɛ k ə ˈ n ɒ m ɪ k s, ˌ iː k ə-/) [1] [2] is a social science that studies the production, distribution, and consumption of goods and services. [3] [4]Economics focuses on the behaviour and interactions of economic agents and how economies work.
It is the lowest rate of unemployment that a stable economy can expect to achieve, given that some frictional and structural unemployment is inevitable. Economists do not agree on the level of the natural rate, with estimates ranging from 1% to 5%, or on its meaning – some associate it with "non-accelerating inflation". The estimated rate ...
A 2012 study published by Inyong Shin of Asia University found that economic inequality in the developed world has a very different effect on economic growth than in the developing world, saying that "higher inequality can retard growth in the early stage of economic development", but that "higher inequality can encourage growth in a near ...
Some economists say that with the nation's unemployment rate near record lows and wages rising steadily, big tax cuts and drops in interest rates would trigger new inflation. That's because ...
The unemployment rate (U-6) is a wider measure of unemployment, which treats additional workers as unemployed (e.g., those employed part-time for economic reasons and certain "marginally attached" workers outside the labor force, who have looked for a job within the last year, but not within the last 4 weeks).