Defining Unemployment.
Defining Unemployment Unemployed people are those members of the labour force who are out of work. To be part of the labour force people must be of working age and fit and available for work. They must also want to work or to be actively searching for work. Between 1950 and 1975 unemployment in the UK was low and less than 5%, and for most of the period 2-3%. A Keynesian consensus to keep unemployment low. 944 White Paper on Employment Policy. Unemployment is now more than twice the level in the 1950s and 1960s. Commitment to Full-employment not as strong as it once was. Measurement of Unemployment Claimant Count Benefits Agency Those claiming Jobseekers Allowance (JSA) or National Insurance Credits on the day of the count. Problems of the claimant count method i) Some people may be unemployed but have no intention of seeking work. ii) Some people may be working in the black or hidden economy, and claiming unemployment benefit. iii) Everyone is not eligible for unemployment benefits. iv) Administrative changes - these reduce the costs of unemployment and reduce the 'headline' unemployment rate. a) October 1988, all 16 and 17 year olds removed. b) December 1987, the introduction of an availability for work questionnaire. c) Restart programme introduced to try and encourage the long term unemployed to look for work. d) More recently emphasis focused upon the
Is inflation always and everywhere a monetary phenomenon?
Is inflation always and everywhere a monetary phenomenon? The phrase "inflation is always and everywhere a monetary phenomenon" was first coined by the economist Milton Friedman in 1956. By this he meant that inflation can only be caused by increases in the money supply. If his statement holds true then controlling inflation is possible simply by controlling the money growth rate. Inflation is usually taken to mean a continual increase of the general price level. Typically a small amount of inflation is seen as necessary in order to keep money active in the economy and allow flexibility in the labour market. The answer to the question depends largely on the qualification of the word inflation as Friedman originally meant it. Friedman's argument actually referred to high and persistent levels of inflation. High inflation was and is still seen as a bad thing, and control of it imperative for a successful economy. The belief that an increase in the money supply causes inflation stems back to old Classical theory. The government can increase the money supply by printing more money. Classicalists believe that a policy of this kind is a pointless and even risky tactic as it can have no long-run effect on the level of output in the economy. The short-run and long-run Classical arguments are briefly illustrated below. Figure 1.1 The short run effect of an increase in the money
Recession - Explain the origins of the current crisis and the measures taken by the US authorities to resolve it.
Recssion "The world economy is in the grip of the most severe recession since 1930s. Banks are ailing and manufacturing industry is collapsing. Consumers have lost much of their wealth and unemployment is climbing" Explain the origins of the current crisis and the measures taken by the US authorities to resolve it. A recession is a situation of decreasing real GDP, falling incomes and rising unemployment for two consecutive quarters. Nowadays the world is suffering the worst recession, which means the economy has negative growth,banks are suffering and manufacturing industry is falling. There are many symptoms show the economy of the world is in a situation of recession. For example the house prices falling, a lot of banks are collapsing and many businesses are declining. The value of money that people have is depreciated so that individuals lose their wealth, then there is less money running in the economy which leads to less production and high unemployment, therefore the GDP is falling. In this essay I would like to analyse what caused the current recession and what are the current policies of the US government to solve the crisis. From last year with some symptoms of the economic recession occurred, the world economy hold the toughest recession. There are many reasons which have lead to recession. The first cause is the credit crunch, which is the main reason leading
What is Money?
What is Money? What is 'money'? How is the supply of money affected by the aims and the actions of the commercial banks, the central bank, and the government's financing of the PSBR? The Concise Oxford Dictionary defines money as "a current medium of exchange". This definition, if rather sparse, does detail the essential nature of money: it is a recognised form of exchange for goods and services. It can take many forms: anything which is accepted by the seller, because it has a recognised value which can be used to purchase further goods and services, will suffice as money. Why money exists, even in centrally planned economies, is because it is efficient. A barter economy, in which no money was used, requires those wishing to make a transaction to exchange goods and services. The complexities involved in such a system are immense. For example, an apple seller, wishing to obtain a hammer, would not only have to find a toolmaker wishing to obtain apples, but would also need to make an agreement regarding the appropriate apples/hammer exchange rate. The former problem is known by economists as a "double coincidence of wants", whilst the latter demonstrates the hassle of having to know relative prices, not only for apples and hammers, but also for every other good or service in the market. If, however, one good becomes the numeraire good, and the value of every other good or
Identification & explanation of the inflation trend over twenty years : Germany
Kay Page 1 5/8/2007 INTRODUCTION. The question asked the identification & explanation of the inflation trend over twenty years. I have chosen German as my country because of it uniqueness. The essay only discussed West Germany and not the east then the United Germany due to the huge different in economics and lack of space. Also I assumed that the theories & interrelationship between varies economic indicators is welled understood. Inflation can be define in several ways.1)a steady increase in the supply of money (Monetarist explanations), 2) Demand persistently exceeds supply.(Phillip curve) but generally there is a general rising price persistency. There are varies type of inflation, i.e. : Hyperinflation, Suppressed inflation, Creeping inflation & Unanticipated inflation. Moreover ,generally 2 inflationary process-1)Demand Pull & 2)cost-push inflation. The economic system of Federal Republic of Germany is Soziale Marktwirtsh1. The states play an important regulatory role and economics policy is based on the Stability Act2. Due to ingrained fear of inflation experienced in 20s & 40s, this has led to a conservative monetary and fiscal policies which is the objectives of Bundesbank3 and the government. Over the past twenty years, the inflation trend can be divided into 4 phase/section-1)1978-84 ,2)1984-90, 3)1990-93 & 4)1993-97.4 I will discuss each phase
Ryanair - Its vulnerability and exposure to the macroeconomic environment
Ryanair: Its vulnerability and exposure to the macroeconomic environment Business vulnerability is a measure of how susceptible an organization is to external events and the possible consequential impact on its business costs and profits. In this essay, I will assess the vulnerability of Ryanair and its degree of expose to macroeconomic shocks. I will also analyse Ryanair's performance since 2000 in comparison to its rival BA, as well as their strategies in how effective they are in raising profits and minimizing their exposure. Ryanair is a low cost Irish airline and one of the most profitable in the airline industry. However, it can be seen as vulnerable and exposed to macroeconomic shocks. To a degree this is due to Ireland's openness. Desmond Gillmor describes it as "one of the most open of economies," and "because of this high degree of openness, the economy is strongly influenced by the external conditions prevailing in the international economic system." (Gillmor 1985, p.5) The airline industry in which Ryanair operates is fairly elastic as shown below. (Knight, B. 2006, p. 14) From the graph, one can see that if the GDP increases or decreases by 1 per cent, the demand for air travel will increase or decrease by 1.7 per cent: air travel and Ryanair is fairly exposed. A firm's average total cost curve (shown below) and the steepness of it can express the
Some researches suggest that there is a positive correlation between monetary incentive and employees' performance. The research conducted by Stajkovic and Luthans (2001) shows that systematic monetary incentive
What do practitioners say about monetary incentive? When people are asked what they think about money, most people will response by using these sentences, "money is everything" or "Money can subdue even gods". As we can see, it can not be denied that money is so important for people. Therefore, Patton (1999) claims that monetary incentive is the best way to motivate employees to do their jobs better. He argues that employees will stop working if they were not offered a paycheck. It is ridiculous to think money can not motivate employees. However, although money is important for people, it does not mean that giving employees financial incentives can guarantee them work better (Spitzer, 1996; Kohn, 1998; Gardiner, 2003; Romano, 2003). Gardiner (2003) argues "we think other people are more mercenary than they really are". Of course, people like money, but money will not be effective if employees' other need is ignored. Kohn (1998) states the correlation between money and performance is not strong. Using money to incentive employees has some problems. Firstly, money does not have a "staying power". Employees will forget this reward in two weeks. Furthermore, financial rewards cost companies a lot of money. Maintaining the same impact on employees requires increasing monetary rewards. Spitzer (1996) even argues that there is no correlation between money and high quality
Explain the main instruments of macro economic policy - Fiscal Policy
Explain the main instruments of macro economic policy Fiscal Policy Fiscal policy is the use of government expenditure and taxation to manage the economy. The main changes in fiscal policy happen once a year in the Budget. It is in the Budget that the Chancellor sets the levels of taxation and government expenditure for the next fiscal year. The fiscal year runs from 5th April one year to 4th April the following year. This is why the budget is usually in March. The changes come generally into effect in the following month. Fiscal policy can be used in various different ways. It may be used to try to boost the level of economic activity when the economy is flagging a little. In this case it is called reflationary policy. Alternatively the economy may doing a little too well and in need of slowing down. In this case deflationary policy is called for. The final use for fiscal policy is as a tool of supply - side policy To help imagine how these policies work think of the economy as a balloon. The air in the balloon is the level of demand or economic activity. If the balloon is a little low and short of air you want to reflate it, but if it is over-expanded and in danger of bursting you deflate it. The same is true of the economy, though when it is over-expanded instead of bursting we get other problems such as higher inflation and a large balance of payments
Youth unemployment and economic growth. Portugal
Transfer-Encoding: chunked Student ID: w17005765 Topic. Youth unemployment and economic growth Country: Portugal Committee: International Labour Organisation Conference Youth unemployment represents the part of the population between the ages of 15-24, who are at present unemployed or looking for work, and whom can predict the future of labour force participatory to the economy (OECD, 2016). In the third quarter of 2017, Portugal’s youth unemployment rate was down to 25.7% from an all-time high of 40.7% in 2013; women were affected 4% more than men (Trading Economics, 2017). Labour force participation rate towards the economy is situated at 59.3% of the population while overall unemployment is at 8.5% out of the 10.32 million population in Portugal in the third quarter of 2017 (Trading Economics, 2017). Portugal’s GDP was at $204.5 billion in 2016 [Chart] (World Bank, 2017) showing a slow improvement of 0.2% in GDP in the second quarter of 2017 (Khan, M and Wise, P. 2017) mainly assisted by exports which account for 40% of GDP (OECD, 2017). The public deficit, escalating unemployment, austerity measures aimed to curb recession and excessive debt levels of a fragile banking sector has caused slow economic growth in Portugal (Pritchard, A, E. 2014). Bail-out deals with the EU, and IMF worth £70 billion has caused an increase in tax revenue, sales tax, the rise in
How clear is the distinction between voluntary and involuntary unemployment?
How clear is the distinction between voluntary and involuntary unemployment? Voluntary and involuntary unemployment are two concepts in economics that attempt to explain why the economy, even when it is operating at full capacity, still has unemployment. The two concepts are also very useful for trying to explain why, when the economy is not operating at equilibrium, unemployment exists. Before the distinction between the two concepts is assessed, it is necessary to explain them. The labour force consists not only of those who are in work, but also those who are unemployed but able to work for any wage rate. The supply of labour is the number of people willing to work at any given wage rate. The wage rate used is the real wage rate, which is the level of the wage divided by prices, thus showing the value of the wage in real terms. Voluntary unemployment is also known as the natural rate of unemployment, as it is the level of unemployment when the economy is operating at equilibrium. In figure one, the LF curve shows the labour force, and the LS curve, to the left of it, shows the labour supply curve. The LD curve shows firms' demand for labour at any given real wage rate, and is downward sloping to reflect the fact that the cheaper the cost of labour, the more firms are willing to employ extra labour. To keep the model simple, the effects of diminishing returns are ignored,