In order to understand unemployment, we have to be clear with what labor force it is at first.

The one

who is currently working or actively seeking for jobs and above the age of 16 are defined as labor force. Labor

force pushes the rate of production of goods and services and decreases the unemployment rates, boosts the

economies in society. However, labor force is not the whole population in society which it comprises about half

of the population only, those are not working nor actively seeking for jobs are known as out of labor force. The

unemployment contributes a portion in the labor force which about 4% to 6% to stay in a healthy economy.

Unemployment is the inability of labor force of participants to find jobs which it results in the decrease in GDP,

those who are not currently working but actively seeking for jobs. Unemployment lasts with a period of times

known as “Duration”, decreases varies with the increasing of economy boosts. Both the unemployment rate and

the duration increase when the economy stagnates or goes into a decline. There are reasons for unemployment,

job leavers who quit or seek for other opportunities, job losers who laid off or fired, new entrants who seeks for

the first time, and reentrants who left and returned; these are all encounter within unemployment. Moreover,

unemployment also counts for those who claim to be looking for work in order to receive public assistances or

unemployment compensation but not truly seeking for jobs. The unemployment rate does not encounter those

who are not seeking for jobs nor those work at jobs below their capabilities, those are either defined as not a

labor force or being employed. The lowest unemployment rate compatible with price stability and zero cyclical

unemployment, reaching the full employment would decrease the chance of approaching inflation. With the

stable market price and under production capacity, there would no chance for economy to near the inflation

flashpoint.

Inflation is the overall increase in the average level of prices. It is the increases in the collected and

computed into an average price from the specific market basket. In order words, there is the rise of all goods in

price for inflation to increase. There could be identified into two categories of income which are nominal

income and real income. The nominal income may rises as you get a raise, but the real income may not

increases as you get a raise. When the raise of the nominal income is not able to satisfied the purchasing power

or covering up the real income, the inflation rate increases and have to reallocate the purchasing power to
satisfy the current situation. It measures with factors as consumer price index (CPI) and producer price index

(PPI), if there is any change or increases in the price of purchasing and the price of producing the goods or

services. There could lead to an increase in inflation. As inflation rate increases could have a dramatic effect in

life and economy. For instance, it would be hard for the future work to recalibrate the market price standard and

market stabilities, which could raise to increase in wages and paying more tax for having a high income.

However, those raising could not satisfies the real income or purchasing power for individuals and lead to

inflation again.

In conclusion, Unemployment and inflation are two economic concepts widely used to measure the

wealth of a particular economy. Unemployment is the total of country’s workforce who are employable but

unemployed. On the other hand, inflation is the increase in prices of goods and services available in the market.