Macroeconomic Challenges Unemployment and Inflation Research Paper 2022

Running head: MACROECONOMIC CHALLENGES UNEMPLOYMENT AND INFLATION
Macroeconomic Challenges Unemployment and Inflation
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MACROECONOMIC CHALLENGES UNEMPLOYMENT AND INFLATION
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EXECUTIVE SUMMARY
This paper examines the major macroeconomic challenges an economy faces and how to solve
these problems. The main issues faced by the US economy are unemployment and inflation. This
paper analyses data related to unemployment and inflation and discusses the effects of these two
macroeconomic issues on the US economy. There are vital concerns related to unemployment
which affects the growth and development of the US. These are unemployment rates among
young college graduates and unemployment rate among Hispanic and Black communities. The
aim of paper is to analyse the social exclusion and social discrimination presents in the US in
form of unemployment rates. This paper discusses the major issues faced by the country and
suggests remedial measures to solve these macroeconomic issues.

MACROECONOMIC CHALLENGES UNEMPLOYMENT AND INFLATION
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Table of Contents
Introduction......................................................................................................................................3
Data..............................................................................................................................................4
Analysis.....................................................................................................................................11
Unemployment......................................................................................................................11
Inflation..................................................................................................................................11
Wages....................................................................................................................................11
Two issues.............................................................................................................................12
Reflection...................................................................................................................................12
Solution......................................................................................................................................13
References......................................................................................................................................15

MACROECONOMIC CHALLENGES UNEMPLOYMENT AND INFLATION
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Introduction
The major macroeconomic challenges that an economy faces are unemployment and
inflation. When people want to work but cannot find a suitable job, then it is known as
unemployment. In an economic term, when the price of goods and services increases over time
in an economy, then it is considered as inflation. Higher demand leads to increase in production,
which lowers unemployment rate. Demand increases as spending capacity of consumers rises
due to increased wages. In this way GDP growth and inflation in an economy increases. As
inflation increases, higher wages may lead to short term labour supply by the workers. As a
result, the unemployment rate declines. Thus, the economy will not be benefitted over the long-
term due to lower rate of unemployment and higher rate of inflation. The unemployment rate of
US stood at 3.5% in August 2019. The annual inflation rate of US was 1.7% in August 2019. The
main concerns of US economy related to unemployment are high unemployment rates among
young college graduates and unemployment rates among Hispanic and Black communities
(Worldbank.org, 2019). The youth unemployment impede their skill development, which results
in loss of human capital, increased poverty and a lower output. Whereas, unemployment rates
among Hispanic and Black communities lead to social disparity and accelerate discrimination.
Thus, the overall well-being of the country hampers. In January 2019, the youth unemployment
rate of US was very high of 9.1%, which slightly decreased in June 2019 to 8.1%. The youth
unemployment rate of the country is higher than the unemployment rate of the US.