According to the BBC, unemployment rates are at their lowest since the beginning of the recession in 2008.However how would such feat influence the economy in the long run and what other issues it may have caused, as far as the other three macroeconomic policies are concerned, is the real question. In order to answer such question with as much detail as it is required for one to understand how the economy is affected, it is required to elaborate on what each macroeconomic policy contains and how it is related to the other three macroeconomic policies. The four objectives of the macroeconomic policy are high and stable economic growth, low unemployment, low inflation and the avoidance of balance of payments deficits and excessive exchange rates
Inflation and unemployment are two key elements when evaluating a whole economy and it is also easy to get those figures from National Bureau of Statistics when you want to evaluate it. However, the relationship between them is a controversial topic, which has been debated by economists for decades. From some famous economists such as Paul Samuelson, Milton Freidman etc to some infamous economists, this topic received a lot of attention. However, it is this debate that makes the thinking about it evolve. In this essay, the controversial topic will be discussed by viewing different economists’ opinions on that according to time sequencing. But before started, it is worthy getting a better understanding of the terms, inflation and unemployment.
The relationship between inflation and unemployment is shown on the Phillips curve. According to the non-accelerating inflation rate of unemployment, the curve is straight (Graph 1). This indicates that if the central bank increases inflation, there is no reduction in the unemployment rate. Conversely, lowering the inflation rate also has no effect on unemployment. This means that the inflation rate canno...
Macropoland, a natural gas and oil importer, has a natural rate of unemployment of about 4.5% and a long run average rate of inflation of about 2%. However, there are two specific time periods where these rates fell below their potential. During the period between 1973-1974, the country had an inflation rate of about 15%, with an unemployment rate of nearly 13%. And now, they are experiencing an unemployment rate of 9% and an inflation rate of 0.4%. As their new economic advisor, it is my job to explain these two time periods.
A decrease in the economy of a government will probably lead to an increase in unemployment levels, decrease in consumer spending and therefore decrease in sustainable profit of businesses. In order to not get in a situation like this and have a running economy, governments may put tax rates down. Hence, consumers will have more spending money. When more money in an economy is present and fewer taxes get payed, consumer demand for goods and services increase, meaning that overall unemployment rates will fall. Also, if governments increase their own spending money in markets, this will additionally lead to a decrease in unemployment levels, as governments create new jobs by building, for example, new public
Macroeconomics Name: Institution: Macroeconomics The basic thesis that the article describes in comprehension is the impact that unemployment has on businesses. Bruce Bartlett, the author, explains that businesses can rake in huge profits from their businesses during unemployment seasons because of the reduced operational costs that businesses usually incur. However, the businesses experience challenges when seeking to increase their output because the unemployed people lack the purchasing power to buy their products or services.
In order to demonstrate that a tax reduction policy is a more fitting option than increasing public expenditures on goods and service as it relates to government combating unemployment, the author will commence by exploring the pros and cons of both concepts. The following are drawbacks to government spending:
The effects of a recession on unemployment fluctuate centered on how lengthy the recession lasts and the way deeply it has taken root. A recession is printed as three consecutive quarters of gross house product (GDP) being within the horrible. Which means that there is no growth in the fiscal process during this time. Routinely these poor intervals will probably be preceded through intervals of very sluggish
Unemployment is a major problem that encounters a number of countries in the modern time; as it is considered a result for a lot of deteriorating conditions all over the world. Is a result of many financial breakdowns, capital money policies had to shut downs many firms and factories and to less their employees. Consequently, it leads to many social crises due to the lack of the fundamental providing which the employee gets during work. Logically, governments had to apply certain policies to avoid economic crises and the negative impacts that are left behind financial breakdowns and to protect their people.