Question

What advanced macroecomic concepts or theories explain why low unemployment rates are generally good for the economy?

Answer 1

• The theory that explains the low Unemployment rate are related to macro Economics
• Macro Economic problem arises when Economy does not achieve the goals of full Employment,stabiility and Economic growth.
• As a result there is a effect which follows unemployment .
• Results when full Employment is achieved.
• It arises from little demand.
• When factors of production that are willing and able to
• Produce goods and services
• Are not engaged in production.
• Unemployment means the Economy is not attaining the macro Economic goals of full Employment.
• It is a problem because
• Less out put is produced.

And thus arises the problem of scarcity in the Economy.

As a result owners of the Unemployed resources receive less income.

Which reduces the standard of living.

The rate of Unemployment tells us how the available pool of labor force are unable to find work.

When the Economy witness growth from the GDP growth rate,

Unemployment tends to be low.

Because of the rising GDP levels,

The out put is higher and hence

Labourers are supposed to keep up with the higher levels of production.

Generally better the Economy.

Lower will be the Unemployment rate.