Question

Questions 2) A) Under what circumstances might it be possible to reduce inflation without causing a recession? (5 points) B) Explain two ways in which a recession might raise the natural rate of employment. (5 points)

Answer 1

solution - A. first of all inflation means, it iq au foom of method of increase in prices and fall in the purchausing value of money. > To seduce inflation without causing a economie decline, the only possible way is to reduce cost production by increasing productivity of labour those were skilled though several means. Af poices are valued more over cost of production, the reduction in output costs reduces poi ce lumpt of couch material automatically But this does not mouke growth of our economy in declined manners as there are many other forms that yields more profits, > Hence, when cost of production gets decreased, inflation can be controlled without. touking place of any recession. B> one way in which a recession might increase of raise the natural rate of unemployment PA by offecting the gobe I job search, increasing the

amount of frictional unemployment Stor thstance, workers those who are unemployed lose theid valuable ob skills and getdemotivated wagge segotiations may give a greated voice to hinsides those who actually pogress jobs. → The workers after being unemployed for one time 05) for a particular time period they feed themselves as Lexo cable to get new goby,