Unemployment, Essay Example

Chapter 7

1. Unemployment: I have chosen this concept because I have always believed that one of the major responsibilities of the government is to ensure low unemployment rate because human capital is arguably the most valuable asset of any nation. Low unemployment rate just doesn’t mean higher economic productivity but also more stable social system. I believe the government should not even hesitate from playing greater economic role if it can help improve employment rate.
2. Types of unemployment: I have chosen this concept because it helps me better understand the different categories of unemployment. I used to this all unemployment is bad but now I have come to understand that frictional unemployment is not always undesirable. In fact, some types of unemployment contribute towards more efficient allocation of human resources.
3. Inflation: I have chosen this concept because I often hear it in the news which means it must be an important economic concept. I care about inflation because it can have a major impact on economic health and quality of living. I still remember reading about the devastating impact hyper inflation inflicted on countries like Zimbabwe.
4. Interest rates: This is an important concept because it is often used in conjunction with the Fed. This concept has helped me better understand the causes of the recent financial crisis. In addition, I have also learnt that interest rates have major impact on economic activity which is why Fed has been keeping interest rates low to boost economic recovery efforts.
5. Business cycle: This concept has helped me better understand economic growth and recession. I now have a better idea of what cyclical inflation is. I have also understood that business cycles continue to repeat themselves which is why recession is often inevitable, especially after speculation-inspired economic boom.

Chapter 8

1. Circular Flow of Income and Product: I have chosen this concept because it very elegantly portrays the relationship between businesses and households. It helps me understand why businesses benefit from high employment rate because workers use their income to purchase products and services. The model also expands my understanding of income that it doesn’t only come in the form of salaries and wages only but also other forms such as investment income.
2. GDP: This concept is important because it explains the total value of products and services within national borders and gives us a good idea of overall national economic productivity. I also learnt that intermediate goods are not included to avoid double counting. I did wonder that since all goods and services are measured in dollars, are their measures taken to offset the impact of inflation since it may exaggerate economic productivity in years of high inflation.
3. Nominal and Real Values: I have chosen this concept because it answered my question as to how effects of inflation are countered. I also learnt that inflation-adjusted GDP is real GDP and is a more reliable indicator of economic productivity. The concept of real GDP is especially useful for economic comparisons among countries with different inflation rates.
4. Per Capita Real GDP: I have chosen this concept because it gives a better idea of quality of living. Countries with large populations may have higher GDP but their quality of living may still be lower than countries with lower real GDP. This concept explains that population size is also important in economics and per capita real GDP tells us a lot about the average productivity of a citizen of a particular country.
5. Foreign Exchange Rates: I have chosen this concept because it is often mentioned by politicians around the world. As I did more research, I found that countries prefer currency depreciation to boost their exports. This explains why China has keeping its currency lower and U.S. officials often complain about it.