Question

When studying the Unemployment Rate, why do we want to consider and discuss Gross Domestic Product in relation?  What is the link between these two? Another way to think about this is "what are the roles that individuals play in an economy?"

What do you think are some minsconceptions between the Unemployment Rate and how it is reported/the general publics understanding of it? How do you think these disconnects create tensions and larger societal issues when trying to implement policies to fix an economy? Considering the current economic climate/situation and putting your answer in perspective of that may be helpful.

Answer 1

Answer:

part 1-

Unemployment is a situation when a person is willing to work at current wages and looking for work but unable to get it. The unemployment rate is calculated by dividing the total number of unemployed by total labour force.

GDP (gross domestic product) is defined as the sum of goods and services produced in a country in a year or period of time.

When studying the Unemployment Rate, we want to consider and discuss Gross Domestic Product in relation because unemployment rate affects GDP of a country if unemployment rate will be low than the GDP of a country will be high and growing. If people are unemployed than they can’t contribute in the production of goods and services, so if more people will be unemployed than the production of goods and services will be less.     

The link between unemployment rate and GDP:

• The unemployment rate and GDP are negatively related. If unemployment rate of a country will be low than the GDP will be high and if unemployment rate will be high than GDP will be low.
• Unemployment reduces production of goods and services in a country which leads to low GDP.
• Unemployment reduces consumption expenditure of people as unemployed people don’t get income and are dependent on others. If consumption will reduce than demand for goods and services will reduce so does their production.

Role of unemployment rate in the economy:

• Reduces production.
• Reduces consumer expenditure.
• Decreases aggregate demand which leads to reduction in aggregate supply.
• Leads to economy towards depression.
• Negatively affects growth of the economy.

Role of Gross Domestic Product in an economy:

• GDP shows the total production in an economy.
• GDP is an important measure to show growth of an economy.
• High rate of GDP Leads to economy towards development.

Part 2-

The misconceptions about unemployment rate:

• Only measure people who are recently looking for the work.
• People don’t have a skill that’s why they are unemployed.
• People are not willing to work at current wages they want wages according to their skills and qualifications etc.

The general public understanding about unemployment rate: that is shows correct unemployment status of an economy and people who are not working are either skill less or they don’t want to work.

These disconnects create tensions and larger societal issues when trying to implement policies to fix an economy because we cannot accurately measure the unemployment rate and the skills of people differ so government can’t make same policies for everyone. Some people don’t have skill for the job which is available. Sometimes people don’t want to work at the given wages they want higher wages etc.

* i find 2nd question some what incomplete still i have answered how much i understand.

* i hope the answer will help you. please give feedback. thankyou