Economic Critique
Economic Critique University of Phoenix
ECO371
January 21, 2013
Economic Critique Currently, our country is in a recession, and the unemployment rate is at an all-time high. The unemployment rate consists of people not only out of work but also those who can work and are actively looking for work (Colander, 2010). Unemployment also means there are more people out of work than there are jobs available (Colander, 2010). Unemployment has extremely negative effects on many people and businesses. The government budgets funds for unemployment benefits and when the unemployment rate rises, the government has to re-allocate funds to accommodate the rising rate. Reallocating these funds also can be challenging when the unemployment rate increases because fewer citizens are paying taxes that fund welfare programs (Buzzle, 2013). Unemployment also can be detrimental to businesses. When families have a reduction in income, they often reconsider what their necessities are, and they often stop purchasing certain items, putting businesses and the economy at risk (Buzzle, 2013). Although it is evident that unemployment affects those looking for work, it can also negatively affect those working because the cost of labor decreases. People are doing more work and are receiving less compensation. They are also willing to accept lower wages just to ensure they have a job (Buzzle, 2013) Although unemployment can be both cynical and frictional, right now, we face a cynical unemployment. Cynical unemployment happens because of a downturn on the economy. The demand for goods is reducing so production reduces and companies have to lay off workers. The United States Government has recently reduced taxes for businesses, allowing them more flexibility to hire employees. Although the government has added unemployment to part of the stimulus package, there has been very
ECO371
January 21, 2013
Economic Critique Currently, our country is in a recession, and the unemployment rate is at an all-time high. The unemployment rate consists of people not only out of work but also those who can work and are actively looking for work (Colander, 2010). Unemployment also means there are more people out of work than there are jobs available (Colander, 2010). Unemployment has extremely negative effects on many people and businesses. The government budgets funds for unemployment benefits and when the unemployment rate rises, the government has to re-allocate funds to accommodate the rising rate. Reallocating these funds also can be challenging when the unemployment rate increases because fewer citizens are paying taxes that fund welfare programs (Buzzle, 2013). Unemployment also can be detrimental to businesses. When families have a reduction in income, they often reconsider what their necessities are, and they often stop purchasing certain items, putting businesses and the economy at risk (Buzzle, 2013). Although it is evident that unemployment affects those looking for work, it can also negatively affect those working because the cost of labor decreases. People are doing more work and are receiving less compensation. They are also willing to accept lower wages just to ensure they have a job (Buzzle, 2013) Although unemployment can be both cynical and frictional, right now, we face a cynical unemployment. Cynical unemployment happens because of a downturn on the economy. The demand for goods is reducing so production reduces and companies have to lay off workers. The United States Government has recently reduced taxes for businesses, allowing them more flexibility to hire employees. Although the government has added unemployment to part of the stimulus package, there has been very
References: Colander, D.C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin. Buzzle. (2013). Retrieved from http://www.buzzle.com/articles/how-does-unemployment-affect-the-economy.html Forbes. (2013). Retrieved from http://www.forbes.com/sites/abrambrown/2012/07/27/u-s-economy-proves-resilient-q2-gdp-grows-by-1-5-beating-expectations/ Inman, P. (2012). No recovery until 2018, IMF warns. Retrieved from http://www.guardian.co.uk/business/2012/oct/03/imf-global-economy-warning Los Angeles Times. (2012). Retrieved from http://www.latimes.com/business/money/la-fi-mo-economy-growth-gdp-20121026,0,6352490.story Reuters. (2012). Retrieved from http://www.reuters.com/article/2012/11/09/us-usa-economy-phillyforecasters-idUSBRE8A810V20121109