What can be done to reduce/control unemployment rate in an economy?
Answers
Answer:
Expansionary Monetary Policy to Reduce Unemployment
Lower interest rates mean that the cost of borrowing is lower. When it's easier to borrow money, people spend more money and invest more. This increases aggregate demand and GDP and decreases cyclical unemployment.
Explanation:
A quick list of policies to reduce unemployment
Monetary policy – cutting interest rates to boost aggregate demand (AD)
Fiscal policy – cutting taxes to boost AD.
Education and training to help reduce structural unemployment.
Geographical subsidies to encourage firms to invest in depressed areas.
Lower minimum wage to reduce real wage unemployment.
More flexible labour markets, to make it easier to hire and fire workers.
Answer:
Expansionary Monetary Policy to Reduce Unemployment
Lower interest rates mean that the cost of borrowing is lower. When it's easier to borrow money, people spend more money and invest more. This increases aggregate demand and GDP and decreases cyclical unemployment.
To reduce the natural rate of unemployment, we need to implement supply-side policies, such as:
Better education and training to reduce occupational immobilities.
Making it easier for workers and firms to relocated, e.g. more flexible housing market and greater supply in areas of high job demand.