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UNEMPLOYMENT by Mind Map: UNEMPLOYMENT

1. Measures to reduce unemployment

1.1. Expansionary fiscal policy / deficit budget policy

1.1.1. i)↓ direct taxes

1.1.1.1. Income tax ↓ , Yd ↑ , C↑ , AD ↑, P ↑ -Firm will employ more workers -Employment rate↑

1.1.2. ii)↓ indirect taxes

1.1.2.1. GST↓ , GPL ↓ ,C ↑ ,AD ↑ ,P ↑ employment rate ↑

1.1.3. Iii) ↑ in government spending

1.1.3.1. Build up new schools,

1.1.3.2. Firm will employ more workers

1.1.3.3. Employment rate ↑

1.1.4. iv) ↑ in operating expenditure

1.1.4.1. Government ↑ wages and salaries of government servant

1.1.4.2. money income ↑

1.1.4.3. C ↑ , AD ↑ , employment rate ↑

1.2. expansionary/tight/restrictive monetary policy

1.2.1. i) ↓ in liquidity ratio

1.2.1.1. Commercial bank have more excess reserve to be loaned out

1.2.1.2. MS ↑, C ↑, AD↑ , P ↑

1.2.1.3. Firm will employ more workers, employment rate ↑

1.2.2. ii)↓ in SRR @ RRR

1.2.2.1. Commercial bank have more excess reserve to be loaned out

1.2.2.2. MS ↑ , C ↑ , AD↑ , P ↑

1.2.2.3. Firm will employ more workers , employment rate ↑

1.2.3. ii)↓ in discount rate @ bank rate

1.2.3.1. Cost of borrowing will be less expensive

1.2.3.2. Commercial bank will demand for more loan

1.2.3.3. Commercial bank have more excess reserve to be loaned out

1.2.3.4. MS ↑ , C ↑ , AD ↑ , P ↑

1.2.3.5. Firm will employ more workers -Employment rate ↑

1.2.4. iv) Open Market Operation

1.2.4.1. Central bank will buy more government securities; treasury bills and bonds from public

1.2.4.2. Commercial bank have more excess reserve to be loaned out

1.2.4.3. MS ↑ , C ↑ , AD ↑

1.2.4.4. Employment rate ↑

1.3. direct measure

1.3.1. i) Creation of new job oppurtunities

1.3.2. ii) Provision of professional skills and technical duration

1.3.3. iii) Development of new land/area

1.3.4. iv) Disseminate info of job vacancies

1.3.5. v) Migration of labor to needed area

1.3.6. vi) Birth control

1.3.7. vii) Provide more training@ retraining

1.3.8. viii) Encourage people to be entrepreneur

2. Effects

2.1. Individual effects

2.1.1. useless

2.1.1.1. result : drug addiction, suicide, mental problems and depression

2.1.2. burden

2.2. Social effects

2.2.1. robbery

2.2.2. burglary

2.2.3. homicide

2.2.3.1. result : poverty rate increase

2.2.4. domestic violence

2.2.5. family split ups

2.3. Economic effects

2.3.1. -resources not fully utilized

2.3.2. output produced < potential output level = loss of output, loss of income and lower economic growth rate

2.3.2.1. Ex : USA and Canada - provide financial help to the unemployed thus increased the government expenditure

2.3.3. higher nemployment rate, the greater the GNP gap and greater income loss

2.3.4. hence there is need for a higher government spending

3. Definition

3.1. no of people who can work but are not working, or not having suitable jobs and looking for other jobs

3.2. Unemployment rate = ( No of unemployed / labor force ) x 100

4. Type and causes

4.1. Residual Unemployment

4.1.1. difficult or impossible to cope with the demands of modern prodution methods and the disciplined of organized workss

4.2. Frictional Unemployment

4.2.1. short term

4.2.2. result from normal turnover in the economy

4.2.3. three groups

4.2.3.1. look for a job for the first time ( ex : fresh grads, school-leavers )

4.2.3.2. job hoppers ( ex : fired from their jobs , voluntarily quit but looking for another job )

4.2.3.3. Re-entrants ( ex : housewife )

4.3. Structural Unemployment

4.3.1. lack the necessary skills for jobs that are available or have particularly skills that are no longer in demand

4.4. Cyclical unemployment

4.4.1. result from short term cyclical fluctuations in the economy

4.5. Seasonal unemployment

4.5.1. unemployment can be predicted to recur periodically according to the time of the year

4.6. Hidden unemplyment

4.6.1. employed but are not productive