Imagine that you are in charge of macroeconomic policy. Answer these questions, being sure to explain your answers.
What are some of the problems, difficulties, or hardships caused by unemployment?
What are some of the problems, difficulties, or hardships caused by inflation?
If you had to make a choice today between a policy that would head off increases in inflation or increases in unemployment, which one would you choose?
The menace of unemployment has caused array of problems from psychological to social to economic dimensions. Psychologically it has effected into stress among the unemployed which sometimes leads to stroke and brain trauma among others. Socially, it has led to homelessness and family tensions especially when the bread winner is not capable to provide for the family demands. In terms of economic hardship has impacted on the levels debt so as to meet the daily human needs. Inflation on the other hand causes the difficulty in long term planning like retirement with a pension that is fixed in nominal terms. It also affects the redistribution of purchasing power which can benefit and demerit others. Being in apposition of policy maker, I would prefer increase in inflation because wages tend to be sticky that is it proves slow change in economic shifts.