How does inflation cause unemployment?
- High inflations lowers purchasing power leading to reduction in aggregate demand and leads to low productivity in an economy
- It reduces the level of saving and capital accumulation leading to unemployment
- It leads to rural-urban migration which turned into open urban unemployment.
- High interest rate during inflationary period, discourages borrowing and investment resulting in unemployment
- High rate of unemployment lead to low output causing inflation
- Restrictive monetary policies adopted to fight inflation discourage investment leading to unemployment.
- Leads to high government expenditure leaving little funds for investment in infrastructures causing unemployment
- The uncertainty of inflation leads to lower investment and lower economic growth in the long term.
- Inflation leads to a decline in competitiveness and lower export demand, causing unemployment in the export sector (especially in a fixedexchange rate).
CATEGORIES Economics
TAGS Dr. Bbosa Science
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