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Economic News Analysis Assignment

   

Added on  2021-04-16

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Running head: ECONOMICS ASSIGNMENT: NEWS ANALYSISEconomics Assignment: News AnalysisUniversity NameStudent NameAuthors’ Note

2ECONOMICS ASSIGNMENT: NEWS ANALYSISSelected News: UK unemployment falls to 1.44 million (BBC News) dated 24 January2018News AnalysisThe news article published by BBC News dated 24 January 2018 presents report on decliningrate of unemployment as is evident from the official figures. Number of people engaged inwork enhanced sharply and simultaneously wages increased at a faster rate while decline inreal wages by 0.5% (UK unemployment falls to 1.44 million, 2018). Reports suggest thathigher demand level have the need to be associated to low supply that can lead to higher priceof labour. This leads to higher bargaining power of workers that can lead to raise wages andenhancement in real interest rate by Bank of England. Decrease in real wages was witnessedthat continued to put pressure on consumer spending. Essentially, low wages can lead to lowunemployment rather than low unemployment operating as a catalyst for better payment.The economic concepts and notions that can be associated to the current article is the tradeoff between wage, unemployment and inflation. The concepts of Phillips Curve show thatthere exists negative correlation between alteration in money wages of employees andunemployment (Uribe & Schmitt-Grohé, 2017). For instance, increase in unemployment wasrelated to decreasing wage growth rate and vice versa. Essentially, an increase in aggregatedemand leads to high level of real GDP, thus, the firm engages more number of workers andoverall unemployment decreases. Nevertheless, an increase in inflationary pressure can beobserved when the economy gets near full capacity (Mankiw, 2014). Again, with low level ofunemployment, workers can necessarily ask for higher level of wages, whilst causing wageinflation (Bernanke et al., 2015). In addition to this, corporations can exert pressure owing toincrease in demand.

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