Question

Please I need today answer for This question and it is very important and I need solution for this issue with all the details , and help me with all the details.Please write your answer to me by typing, not by handwriting, so that I can read and understand your answer clearly.BR/Hassan

Question : Unemployment and economic policy . Please be brief and to the point. .

Your task is to explain how employment and/or unemployment is determined according to theories discussed in the course. You may choose to focus on either variable or both. What policy advice would you give to a government trying to reduce unemployment?

Answer 1

UNEMPLOYMENT----- It means when people are willing to work at the prevailing wage rate but they are unable to find work In

the economy,it is called unemployment.

ECONOMIC POLICY------It refers to actions taken by the govt to bring stabilisation in the economy.These may be to control money supply,taxation policy,govt budget and labour market etc.

Types of economic policy of govt-----

Monetary policy

Fiscal policy

Economic theories for employment / unemployment----

Classical theory of employment

Keynesian theory of income ,output and employment.

POLICY ADVICE TO THE GOVT TRYING TO REDUCE UNEMPLOYMENT

As per the classical theory of employment,the govt should adopt the lassiaz faire policy i.e no intervention by govt in in the economy .The theory assumes that there is always full employment in the economy.

As per keynesian theory ,full employment is a rare phenomenun in the economy ,there is usually under employment in economy. So ,the govt should interfere with economic affairs in the nation by increasing aggregate demand ( AD) as explained below ------

* The govt has two alternatives----,to adopt monetary policy measures or fiscal policy measures.

* In order to increase AD through fiscal policy measures, the govt increases public expenditure and reduces taxes. By doing so, propensity to consume increases ,which finally increases AD. It ultimately increases employment level.

* In order to increase AD through monetary policy tools ,the instrument ,the central bank will adopt---

Decreasing repo rate

Decreasing legal reserve ratios

Decreasing margin requirement

Buying govt securities under open market operations

By adopting these measures ,the govt can reduce unemployment.