Prepare a response analyzing the relationship among inflation, unemployment, and the business cycle in the airline industry. Then, assess the impact of inflation, unemployment, and the business cycle on the airline industry. Explain whether current economic conditions are more consistent with the Keynesian or classical economic theories.
The response addresses the queries posted in 811 words with references.
// Before writing about this paper, we have to first, analyze the relations between the 'Economic Indicators' i.e. inflation, unemployment, and the business cycle. We have considered these factors with respect of an Airline Industry. But first, we have to talk about these indicators in brief. //
Relation between Different Economic Indicators
All three terms, business cycle, inflation and unemployment are related to each other. Inflation affects both the business cycle and unemployment. There is an inverse relationship between rate of inflation and rate of unemployment. This relationship involves a trade off that is paid a higher rate of inflation to reduce the unemployment and for reducing the inflation, price in terms of a higher rate of unemployment has to be borne (Ahuja, 2007). Yields of the airline industry are decreased with an alarming rate because of Inflation, which will affect the financial state of the airline industry and will result into a low employment position in the industry.
Changes in the employment and interest rates also relate to the business cycle or economic cycle. Business cycle is a pattern of different periods of economic growth and a declining period in an industry (Dwivedi, 2006). Inflation will force the industry towards fiscal decline and it will cause financial instability in the industry.
// Above we discussed the relationship between these economic indicators. Moving on, ...
The response addresses the queries posted in 726 Words, APA Refences