SARABJEET KAUR
ID- s0264574
COURSE- ECONOMICS FOR TODAY
RESEARCH ESSAY - ON REALATIONSHIP BETWEEN INFALATION AND UNEMPLOYMENT, MONETARY POLICY INFLUENCE OVER ECONOMIC GROWTH.

The connection among unemployment inflation grabs the attention of many economist. According to okuris law, there is a visible clear connection among country’s outcome that is declined in unemployment lead to higher nation output. However, other popular economist William Philips said that there is inverse relation between unemployment inflation because Philips argued that when high reaction of workers causes increase in nations output which abo lead to high wage, customers to carry enough money to utilize, so which customers demanding more good services price would include, so that is situation of inflation increase lead to downfall in unemployment inflation full down result to increase the ratio of unemployment. For better understanding it is important to know what is reason behind the increase relationship between both that is when there is increase in aggregate demand (AD to AD2) lead to increase in real GDP (Y1 toY2) hence companies need more labor and unemployment falls. Monetarists were criticize the Philips increase relationship, because they believes that there is no trade of in long run (As is inelastic) they said that when demand aggregate is increase than employees want higher nominal salary. Furthermore when employees get it, and work more as they think it is actual wages is increased. Thus, the upward trend in AD lead inflation and hence real wages stay same. Actually, employees understand that actual paid rate is similar to previous year. Thus employees price experience has been changed they do not want to do longer shift. Therefore the actual output shift to its real level. Hence, the rate of unemployment stays stable, on the other hand rate of inflation become high