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Unemployment policies evaluation - Coggle Diagram
Unemployment policies evaluation
Supply-side
Cyclical
affects output not AD
Natural
all supply side measures help reduce unemployment but technological advances may replace labour with capital
Expansionary fiscal
cyclical
is helpful during deep recession
direct impact on AD
automatic stabilisers such as unemployment benefits increase AD.
subject to major time lags
tax revenues may fall
increased govt. debt
crowding out due to borrowing and interest rates
natural
directed towards supply side policy (government spending on education)
Expansionary monetary
Cyclical unemployment
IR can easily be reversed or changed+ no political restrains.
is not helpful when economy is in deep recession
Natural unemployment
not very efficient as structural unemployment requires skills and training