What Is Unemployment
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What is unemployment: Somebody who are able to work can not find a job or People, who is actively seeking for job, is unable to find one.
- The economic system change everyday, Say’s Law or law of market had been obsolete.
- In his book, A General Theory of Employment, Interest and Money, Keynes counter the classical law of market
- He focused on how government spending will affects on unemployment rate.
- His reason are: o Save and invest is what people do with their money. o Investment depends on how much profit it will bring back to the business, this is due to the business cycle and new technology. o More investment will create job for people and results in an increase of output. o Saving, on the other hand, will not automatically match with invest, because somebody will keep their money in form of cash. o When there is no investment, due to these reasons. Unemployment happens -> over-production because the people have no money to spend -> depression
- Keynes believes that depression will continued indefinitely. No saving because of low interest rate plus people will withdraw money to survive ->no investment -> unemployment -> no money -> no saving -> on and on.
- He suggested that governments should spend money to fill the gap between saving and invest. A free market need continuous consumption, therefore, with the government spending, the people will be able to buy.
- From buying good that remain unsold, business will have the ability to hire people to produce and in turn, reduce unemployment, stop depression.
- According to Keynes, spending will benefit the economy, due to multiplier effect.
What is unemployment: Somebody who are able to work can not find a job or People, who is actively seeking for job, is unable to find one.
- The economic system change everyday, Say’s Law or law of market had been obsolete.
- In his book, A General Theory of Employment, Interest and Money, Keynes counter the classical law of market
- He focused on how government spending will affects on unemployment rate.
- His reason are: o Save and invest is what people do with their money. o Investment depends on how much profit it will bring back to the business, this is due to the business cycle and new technology. o More investment will create job for people and results in an increase of output. o Saving, on the other hand, will not automatically match with invest, because somebody will keep their money in form of cash. o When there is no investment, due to these reasons. Unemployment happens -> over-production because the people have no money to spend -> depression
- Keynes believes that depression will continued indefinitely. No saving because of low interest rate plus people will withdraw money to survive ->no investment -> unemployment -> no money -> no saving -> on and on.
- He suggested that governments should spend money to fill the gap between saving and invest. A free market need continuous consumption, therefore, with the government spending, the people will be able to buy.
- From buying good that remain unsold, business will have the ability to hire people to produce and in turn, reduce unemployment, stop depression.
- According to Keynes, spending will benefit the economy, due to multiplier effect.