Government And Central Bank Control Unemployment - 1597 Words

How can the government and central bank control unemployment? Consider both fiscal and monetary policies and the effect of these policies on other macroeconomics variables such as inflation and economic growth. Unemployment is the labour force who available to work but cannot fine a job. Imagine that someone who lose the job become to unemployed worker. Certainly, they have to worried about their income and decide to cut on spending such as reduce to eat out for save money. From this situation, may be affect to the restaurant to lose revenue. When restaurant lose income they decide to cut down expenditure such as hire employee less or not to invest more including cutting order some vegetable from orchardist. Eventually, the restaurant staff and the orchardist will be affected in income and will be cut on their consume finally. Thus from this situation demonstrate how can unemployment multiplier mechanism affect economic system. Unemployment is regards as the fundamental economic problem of any country because it relate with livelihood and quality living of population (Cowen and Tabarrok, 2013) This essay will start by describe how government and central bank can control unemployment through policies namely fiscal policy and monetary policy. Furthermore, also include the consequence and effect of each policy to inflation and economic growth. Then for the rest of this will presents the policy what consider in supply side to handle unemployment. Fiscal policy become knownShow MoreRelatedInflation And Its Effect On The International Market853 Words   |  4 Pagesnational currency, which is used to describe the added value on the international market. Unemployment means any paid work status is not obtained. In economics category, a person willing and able to get the reward for the work, but the actually situation is yet to find a job, so that it is considered into unemployed. The rate of unemployment is the proportion of the labor force in line with unemployment conditions. New Zealand statistician William Phillips (AW Phillips) in 1958 under the BritishRead MoreFunctions of Central Bank1440 Words   |  6 Pages19201/2010 BANKING INSURANCE CENTRAL BANK A central Bank is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. The central bank often also oversees the commercial Banking system within its country. A central Bank is distinguished from a normal commercial bank because it has a monopoly and creating the currency of that nation, which is usually that Nations legal tender. Central Bank of Kenya is the highest BankingRead MoreEssay about The United Stated Federal Reserve Board1077 Words   |  5 Pagesprevent and curtail unemployment? The United Stated Federal Reserve Board (the Fed), a component of the Federal government, conducts monetary policy. The Fed essentially plays the role for the nation’s banks that these banks play for us. Just as we borrow money from the banks, the banks borrow money from the Fed. Just as we pay interest on the money we borrow, banks pay interest on the money that they borrow from the Fed. The Fed can use monetary policy to decrease unemployment by lowering the interestRead MoreConventional and Unconventional Tools Used by Central Banks, A Basic Study Guide1320 Words   |  5 Pagestools used by central banks. (a) 1. 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The primary goal of monetary policy is to keep price stability which is very important for central banks, it could help central banks make the monetary policy process is apoliticalRead MoreMonetary and Fiscal Policy Essay1508 Words   |  7 PagesMonetary Policy Monetary policy is the mechanism of a country’s monetary authority (usually the central bank) controlling money in the economy so as to promote economic growth and stability by creating relatively stable prices and low unemployment. A monetary policy mainly deals with the supply of money, availability of money, cost of money and the rate of interest so as to attain a set of objectives aiming towards growth and stability of the economy. Monetary policy is said to be expansionaryRead MoreMonetary Policy On The Connections Between Money, Banks, And Credit960 Words   |  4 Pages This paper focuses on Monetary Policy, which centres on the connections between money, banks, and credit to lenders. In addition, this paper will cover the effect on macroeconomic factors such as GDP, unemployment, inflation, and interest rates. With many combinations of monetary policy, the paper covers the optimal balance between economic growth, low inflation, and a reasonable rate of unemployment. Money is any object that functions as a means of exchange that society accepts social and legalRead MoreMilton Friedman And Milton Keynes1580 Words   |  7 PagesMilton Friedman and central banks when it comes to inflation. However, what both John Maynard Keynes and Milton Friedman can agree on is the fact that inflation is seen to be a great evil. Moreover, the central banks interpret inflation as moderate being the fact that some inflation is seen to them as tolerable. Historically, Friedman and Keynes have had disputes on a better system for the control of inflation. For instance, Friedman put forward the monetary policy for the government to use in orderRead MoreThe Conflict Between Inflation And Unemployment1374 Words   |  6 Pages When you attempt to control inflation by raising interest rates it may cause the exchange rate to appreciate and this can have a damaging effect on demand in the export industries. Now the conflict between inflation and unemployment is a lit tle different. During a period of strong GDP growth, falling unemployment will create a demand- ­Ã¢â‚¬ pull and cost- ­Ã¢â‚¬ push inflation leading to a decline in the real purchasing power of money. There are policies designed to control demand- ­Ã¢â‚¬ pull or cost- ­Ã¢â‚¬ pushRead MoreFiscal Policy, Monetary Policy, and a Healthy Gross Domestic Product1716 Words   |  7 PagesEconomic Health/Fiscal Policies and Federal Reserve/Monetary Policies Paper Understanding Gross Domestic product is central for understanding the business cycle and the progression of long-run economic growth (Hubbard O’Brien, 2011, p. 631). The GDP is defined as the value-added of all goods and services produced in a given period of time within the United States (2008). The GDP is widely used as an gauge economic wellness and health of the country. What the GDP represents has a hefty impact