For a better understanding of the unemployment rate and its complex link to inflation, listen to the following
Quit Threat! podcast.
And for an interesting discussion of how policy makers decide on the desired level of inflation, listen to the following Planet Money Secret Target podcast. Then post a discussion thread and two replies to a colleague.
The Secret Target
Your post should:
* Include a discussion of what unemployment and inflation measure. What potential economic issues result from high levels of unemployment and inflation? Are there ideal ‘target’ rates for both of these measures?
* Address the question, what happens to wages and prices when unemployment rates are low enough that workers gain some power over their employers because they can threaten to quit and easily find another job (quit threat)? What does it mean to have full employment in the economy?
In your reply:
* Respond to your colleagues’ discussion of unemployment and inflation. Are there any other issues you would add that result from high levels of these two measures?
* What insight does their discussion give us into the unemployment and inflation rates? Are there other measures besides the traditional unemployment metric or inflation rate that you would prefer to use to evaluate the state of our economy?
In order to see the two discussions you must write replies for, please submit the assignment to me. Once you send me the discussion, I will send you the two student discussions you must write replies for in the chat box