Question

Write short notes on Concept of underemployment equillibrium.

Answer 1

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Underemployment in an economy implies that workers have to settle for jobs that require less skill than they possess or that offer lower wages or fewer hours than they would like.

• The degree of underemployment is dictated by the strength or lack thereof of the job market and tends to rise when the economy and employment are weak.

• Advocates of Keynesian economics suggest that a solution to an underemployment equilibrium state is through deficit spending and monetary policy to stimulate the economy.

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