1, HOW THE GOVERNMENT CAN THE SOLVE PROBLEM OF ECONOMIC

STAGNATION, WHAT WERE KEYNESIAN RECOMMENDATION WHEN

THE ECONOMIC RECESSION APPEARS.

2, MONEY APPRECIATION WILL RESULT IN LOSS OF

COMPETITIVENESS IN INTERNATIONAL MARKET

3, how high unemployment rate affect the economy.

High unemployment indicates the economy is operating below full capacity and is
inefficient; this will lead to lower output and incomes. The unemployed are also
unable to purchase as many goods, so will contribute to lower spending and lower
output. A rise in unemployment can cause a negative multiplier effect.

Loss of earnings to the unemployed. Unemployment is one of the biggest causes of poverty in the UK.
Prolonged periods of unemployment can push households into debt and increase rates of relative
poverty.

Potential homelessness. Loss of income can leave people without sufficient income to meet housing
costs. Rises in unemployment often exacerbate the rates of homelessness. (BBC)

Harms future prospects. Those who are unemployed will find it more difficult to get work in the future
(this is known as the hysteresis effect)

Lost human capital. If people are out of work, they miss out on ‘on the job training’ This is a vital
component of human capital and labour skills; high rates of unemployment can reduce labour
productivity. If someone is out of work for two years, they miss out on the latest working practices and
trends. Being unemployed can also affect the confidence of the unemployed and they become less
employable in the future.

4, Macroeconomics study aggregate economics variable, rather than individual

analysis.

Microeconomics focuses on the supply that determines the price level of the
economy.
It uses the bottom-up strategy to analyse the economy.
 microeconomics tries to understand human’s choices and allocation of resources.
It does not decide what are the changes taking place in the market, instead, it
explains why there are changes happening in the market.
The key role of microeconomics is to examine how a company could maximize its
production and capacity, so that it could lower the pr

Macroeconomics
studies the association between various countries regarding how the
policies of one nation have an upshot on the other. It circumscribes within its
scope,
Prominent areas of research in the field of macroeconomics concern the
implications of fiscal policy, locating the reasons for inflation or unemployment,
the implications of government borrowing and economic growth on a nationwide
scale.

Macroeconomics deals with various issues like national income, distribution,

employment, general price level, money, and more.

Solves the major issues of the economy like deflation, inflation, rising prices
(reflation), unemployment, and poverty as a whole.

5, Explain The Three Type Of Unemployment .What Are The Cause And Policy Option To Solve
Each Type Of Unemployment

Unemployment is a term referring to individuals who are employable and actively

seeking a job but are unable to find a job. Included in this group are those people in
the workforce who are working but do not have an appropriate job.three types of
unemployment:

cyclical,

frictional,

Structural.
 Frictional unemployment

Frictional unemployment is the result of voluntary employment transitions within an

economy. Frictional unemployment naturally occurs, even in a growing, stable
economy. Workers choosing to leave their jobs in search of new ones and workers
entering the workforce for the first time constitute frictional unemployment.

Frictional unemployment is caused by temporary transitions in workers’ lives, such as when a

worker moves to a new city and has to find a new job.

Frictional unemployment also includes people just entering the labor force, such as freshly
graduated college students.

Policy Option to Solve frictional unemployment

Reduce unemployment benefits. Lower benefits will encourage people to take

a job quicker.
it is not clear whether this is desirable. It may encourage people to take a job
not fully suited to their skills.
Better matching of labor with vacant positions. Internet job matching websites
have the potential to find quicker job vacancies for the unemployed. If the
database is comprehensive for all positions, then workers can more easily see
which jobs to apply to. There is a case for the government to undertake a
comprehensive job matching service as private sector competition may diffuse
the market.

Structural unemployment

Structural unemployment is caused by a mismatch in the demographics of workers and

the types of jobs available, either when there are jobs available that workers don’t have the
skills for, or when there are workers available but no jobs to fill.

Causes of Structural unemployment

Geographical immobility’s –

This occurs when workers are unable to move from areas of high unemployment to
areas with labor shortages.
This could occur due to the difficulties of buying/renting a house. It could also be
due to family attachments to their current area.

For example, often there are vacancies in London but unemployment in outlying
regions. However, it is difficult for the unemployed to leave the northeast and find a
place to live in London.

Occupational immobility’s

This occurs after changes in the economy, which lead to shifting demand for skilled
labour.

For example, if there is a closure of manufacturing firms, workers with skills for these
types of jobs may struggle to relocate in new industries where very different skills
are required (e.g. IT skills, teaching, accountancy). It takes time for people to retrain
and older workers may feel it is too difficult.

Policies to solve structural unemployment

Education /training

These training schemes need to be focused on skills and qualifications which will
enable the unemployed to find work in new industries.

This could include the government paying for training schemes in skills which are in
short supply.

Example:-vocational training such as bricklaying/plumber/electrician or nursing.

Housing subsidies

With geographical unemployment, the government could offer housing benefits to

help the unemployed take jobs in expensive areas of high employment.

However, this could prove quite expensive, and it may be hard to evaluate who
needs the housing benefits and for how long.
A long term solution maybe for the government to build housing in expensive areas.

Employer subsidies
Rather than encourage workers to move, the government can offer incentives for
firms to relocate to depressed areas.

For example, the government have relocated many civil service jobs away from
London and to areas of higher unemployment such as South Wales, Yorkshire and
Scotland.

Labor market flexibility

Free market economists place greater stress on improving labour market flexibility.
For example, allowing part-time, temporary work provides more opportunities for the
unemployed to gain new opportunities.

However, these jobs are more insecure, often lower paid and lead to a form of
under-employment.

Cyclical unemployment.
Cyclical unemployment is caused by declining demand: when there is not enough demand in
an economy for goods and services, businesses cannot offer jobs.

Cyclical unemployment is a natural result of the business cycle in times of recession: if all
consumers become fearful at once, consumers will attempt to increase their savings at the
same time, which means there will be a decrease in spending, and businesses will not be able
to employ all employable workers.

Policies to solve Cyclical Unemployment

The federal government can expand fiscal stimulus through government

spending and lowering taxes.
Cutting taxes for consumers and businesses increases the amount of money
in the economy, which increases consumer and business spending.
Fiscal stimulus can also include a check or direct deposit sent directly to
each taxpayer for them to spend in the economy.
The increase in consumption boosts the demand for goods and services,
increasing GDP.
Higher demand boosts production resulting in businesses hiring more
workers or stemming additional layoffs. As a result, cyclical unemployment
decreases as fiscal stimulus injects much-needed cash into a struggling
economy.