Question

Examine the data of Morocco country if it satisfies the following conditions. Explain how will you evaluate these conditions. 1. Marshall - Lenner Condition      2. Phillip's Curve       3. Okun's Law

Answer 1

Marshall-Lerner condition:
This condition satisfies that the demand elasticity’s for exports and imports are greater than one. The country’s import becomes more expensive than exports with respect to relative change in price. This condition explains that indirect effects of quantity of trade exceed the direct effect. The Morocco economy is based on liberal economy based on supply and demand in the market. It depends of export. Morocco employs only one-third of their workforce. Under the Marshall-Lerner condition, Moroccan economy mainly depends on export. This condition shows that due to high expense of import; the other countries will not come forward for import trade. This stimulates economic development and growth. On the other hand, the import trade relations reduced.
Philip’s curve:
Philip’s curve shows the functional relation between inflation and unemployment. Moroccan foreign currency controls the credit supply. Privatisation stimulated trade in shares of large former state owned portions. Thus there is high earnings attain. Privatisation discourages the employment level and wage rate. So less people attracted towards the labour market. Thus inflation created through this. One third of the population depends on mining, manufacturing and construction. The rest of the people engaged in trade, finance, and service sector. There is high level of unemployment among the nontechnical degree graduates. The overall growth elasticity of employment is low.
Okun’s law:
Okun’s law state the relation between unemployment and GDP. The structure of Moroccan economy is service based. When the number of participants entered to the market leads declining participation of existing workers. Rural migration makes pressure on urban labour market. Foreign competition leads la