DEFINITION OF INFLATION AND UNEMPLOYMENT ON THE ECONOMY
According to Mr. C.C. S. Okeke an economist “Inflation is a continuous rise in prices of goods and services”.
That is a situation of persistent increase in price of commodities without a proportionate increase in the supply of the commodities. When the expansion in the supply of money is greater than the expansion in the supply of commodities, the effects is inflationary.
The implication of the inflationary period is the fall in the value of money. Therefore money cannot effectively perform its function as the store of value.
UNEMPLOYMENT: According to J. L. Hanson, a renowned economist, he said that it is “a state of not being used”. It may in other words be defined as a situation whereby there is no work. In contemporary Nigeria, it is not uncommon to see many able bodied, academically and professionally trained person armed with certificates in various disciplines as well as thousands of unskilled and skilled persons hopelessly in search of jobs which are not there.
EFFECTS OF INFLATION ON THE NATION’S ECONOMY POSITIVE
Inflation has many effects on the economy of a nation. Some of these effects are positive and others are negative. The following are important and need to be discussed.
(1)INFLATION ENCOURAGES GREATER OUTPUT – Inflation usually experienced during intense economic activities. Whatever that is produced, there is usually favourable market for it. Since producers make profit out of the goods they produce and sold, they are encouraged by the huge profit to produce more with a few to making more profit.
(2)INFLATION INDUCES EMPLOYMENT – Since producers are produced by the profit motive to produce more during inflation, they need to employ more workers who have been of work will now be employed with the result that they obtain their daily breed from the remuneration lived from their employment. At this juncture, it will be necessary to point out the inflation is not altogether bad. Mild inflation is necessary to stimulates economic activities especially after depression.
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