Weekly journal Essay Example | Topics and Well Written Essays - 250 words - 3

Weekly journal - Essay Example he recessionary face of the economy when the businesses are suffering losses and a result of these losses they decrease their labor force which results in increase in the rate of unemployment (Krugman 144). Due to increase in unemployment, those who lose their jobs buy less goods and services and their spending mostly focuses on fulfilling their necessities and they stop spending money on luxurious goods and services. Another subject that has been discussed in the chapter is inflation which is a term used to denote the continuous increase in the prices of goods and services (Krugman 151). Increase in the inflation rate at one point in time leads to decrease in the ability of the consumers to purchase goods and services. Due to this they are able to purchase less goods and services in a given time period as compared to the previous time period when the rate of inflation was low. The chapter states that the government has to intervene to solve the counter inflation and increase the liv ing standards of its