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Macroeconomic Problem (UNEMPLOYMENT) (Types of unemployment (Structural…
Macroeconomic Problem (UNEMPLOYMENT)
Definition
The number of people who can work but are not working or not having suitable jobs and looking for jobs
Effects of Unemployment
Individuals Effects
Individuals have low self-esteem, feel useless & burden to the family and society > INCREASE case of drug addiction, suicidal rate and mental problems
Social Effects
INCREASE crimes rates & INCREASE poverty rate
Natural Rate of Unemployment
Occurs when the unemployment rate is about 5% or all unemployment is frictional/structural.
Unemployment Rate
(Number of Unemployment/ Labor Force) x 100
Labor Force
Those aged between 15-64 years and who are willing and able to work
Types of unemployment
Structural Unemployment
Cyclical Unemployment
Frictional Unemployment
Hidden / Disguised Unemployment
Residual Unemployment
Seasonal Unemployment
Fiscal Policy
Implemented an expansionary fiscal policy
Tax (T) DECREASE and INCREASE government expenditure > AD INCREASE > Production INCREASE > DECREASE Unemployment
Monetary Policy
Implement an expansionary or easy monetary policy > INCREASE Money supply
Economic Effects
Resources are not fully utilized > output produced is less than the parental output level. Implying a loss of output & income
Direct measures
Following measures is to provide more training to increase the skill of workers