Unemployment vs Inflation
Macroeconomic Objectives
AO3
Syllabus requirement
Comparison of relative costs of unemployment and inflation.
Assessment objectives
AO3 Synthesis and Evaluation
Summary
This topic compares unemployment and inflation, explaining what each is and how each imposes economic and social costs. It describes how high unemployment wastes productive resources and reduces incomes, while inflation reduces the purchasing power of money and creates uncertainty; it also explains short-run trade-offs between policies that target unemployment and those that target inflation. Understanding their relative costs requires assessing magnitude, duration, predictability and who is affected.
