Question

Inflation and unemployment are macroeconomic failures.

True or False

Answer 1

True-These are macroeconomic co-ordination failures

Un­employment- denotes a situation of involuntary resource idleness . If this issue prevails, a nation’s real output will be lower than its potential output. So one of the goals of Govern­mental strategy is to guarantee full -employment in the economy which involves non-existence of involuntary unemployment of any kind.

Inflation-is a circumstance of continuously increasing price levels of products & FOPs. The opposite case is called deflation. During inflation few persons benefit but most lose. So there is an alteration in the income distribution pattern. Thus, one of the goals of governmental strategy is to guarantee price stability which implies the non-existence of inflation/ deflation.