Page 108 - F1 - AB Integrated Workbook STUDENT 2018-19

Chapter 7

7.4 Inflation

Why we want low inflation Counter argument

 Inflation causes uncertainty and  If inflation is uniform and
stifles investment. predictable, then it is not a problem.

 The poor and those on fixed  Those on index linked pay may
incomes suffer. benefit.

 Inflation discourages savings  Companies can see their profits.

 In extreme cases the function of
money may break down.

 Inflation distorts the working of the
price mechanism

7.5 Unemployment

Why we want low Counter argument
unemployment

 The Government has to pay out  Some unemployment will arise
benefits rather than collect taxes. even in a healthy economy as
people have the confidence to
 Unemployment has been linked to change jobs.
rising crime, poor health and the
breakdown of the family.

 Unemployment can damage
peoples' self-esteem.

 The long-term unemployed may
become deskilled/unemployable.

 Unemployment is a wasted
resource.

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