WHICH ECONOMIC POLICY ?

WHAT IS THE MAIN CAUSE OF HYPER INFLATION

• lose their jobs due to changes in industry – reduction of tariffs, lack of competitiveness technological change

• Increased costs of production, most commonly wages and raw materials. May be imported from overseas

• High levels of consumer and business confidence – AD >AS

• caused by poor economic management, printing money

WHAT IS THE MAIN CAUSE OF Long term unemployment

• People put out of work due to fall in AD – negative multiplier effect as sales fall, employment falls

• People who are unable to enter the workforce. They lack social skills, experience, confidence

• Workers choose to leave jobs in search of higher wages or better conditions

• lose their jobs due to changes in industry – reduction of tariffs, lack of competitiveness technological change

WHAT IS THE MAIN CAUSE OF CYCLICAL unemployment

• People put out of work due to fall in AD – negative multiplier effect as sales fall, employment falls

• People who are unable to enter the workforce. They lack social skills, experience, confidence

• Workers choose to leave jobs in search of higher wages or better conditions

• lose their jobs due to changes in industry – reduction of tariffs, lack of competitiveness technological change

WHAT IS THE MAIN CAUSE OF STRUCTURAL unemployment

• People put out of work due to fall in AD – negative multiplier effect as sales fall, employment falls

• People who are unable to enter the workforce. They lack social skills, experience, confidence

• Workers choose to leave jobs in search of higher wages or better conditions

• lose their jobs due to changes in industry – reduction of tariffs, lack of competitiveness technological change

WHAT IS THE MAIN CAUSE OF COST PUSH INFLATION

• caused by poor economic management, printing money

• Increased costs of production, most commonly wages and raw materials. May be imported from overseas

• Combination of  high levels of demand pull inflation and cost push inflation – uneven economic activity

• High levels of consumer and business confidence – AD >AS

WHAT IS THE MAIN CAUSE OF DEMAND PULL INFLATION

• caused by poor economic management, printing money

• Increased costs of production, most commonly wages and raw materials. May be imported from overseas

• Combination of  high levels of demand pull inflation and cost push inflation – uneven economic activity

• High levels of consumer and business confidence – AD >AS

WHAT IS THE MAIN CAUSE OF STAGFLATION

• caused by poor economic management, printing money

• Increased costs of production, most commonly wages and raw materials. May be imported from overseas

• Combination of  high levels of demand pull inflation and cost push inflation – uneven economic activity

• High levels of consumer and business confidence – AD >AS

WHAT IS THE MOST EFFECTIVE POLICY IN REDUCING COST PUSH INFLATION

• Job retraining programs – Provide re-education programs , subsidise courses

  New education courses

• Microeconomic reform policies to reduce costs of production and increase efficiency ( shifts AS curve to right)

• Expansionary monetary policy – cut interest rates , talk up the economy

• Contractionary monetary policy

  Increase interest rates, cut money supply

WHAT IS THE MOST EFFECTIVE POLICY IN REDUCING COST PUSH INFLATION

• Job retraining programs – Provide re-education programs , subsidise courses

  New education courses

• Expansionary fiscal policy – increase government spending, cut taxes

  Positive multiplier effect 

• EIndustrial reform policies to make labour cheaper and increases economic growth and generates a multiplier effect

• Reduce trade barriers , allow cheaper imports to put competitive pressure on local producers

WHAT IS THE MOST EFFECTIVE POLICY IN REDUCING DEMAND PULL INFLATION

• Job retraining programs – Provide re-education programs , subsidise courses

  New education courses

• Microeconomic reform policies to reduce costs of production and increase efficiency ( shifts AS curve to right)

• Expansionary monetary policy – cut interest rates , talk up the economy

• Contractionary monetary policy

  Increase interest rates, cut money supply