Question

Write short essay between 1800-2000 words, stating economic problem and discuss why it exists.

GUILDLINES TO FOLLLOW FOR THE WRITE UP

1. State the problem or issue .

2.Discuss why it matters and what is at risk.

3.Present how economics cn help, which tool to use in economics toolbox to use?

4. Identify the challenges linked with solutions available.

Answer 1

• The economic issue is Unemployment

Unemployment is the situation of actively looking for employment but not being currently employed.

Unemployment is one of the clearest indicators of which way the economy is moving. That might cause action by the Federal Reserve, which has a mandate to help reduce unemployment, like increasing the nation's money supply, also known as Quantitative Easing, in order to boost the economy .

John Maynard Keynes believed that the root cause of unemployment is the desire of investors to receive more money rather than produce more products, which is not possible without public bodies producing new money.A third group of theories emphasize the need for a stable supply of capital and investment to maintain full employment.On this view, government should guarantee full employment through fiscal policy, monetary policy and trade policy as stated, for example, in the US Employment Act of 1946, by counteracting private sector or trade investment volatility, and reducing inequality.

Taxation is one of the primary fiscal policy tools the government has at its disposal to reduce unemployment. High taxes mean consumers have less disposable income, which results in less consumption. Cutting taxes is a common method the government uses to spark economic growth and reduce unemployment .