To What Extent Does a Policy of Full Employment Conflicts with Other...

Full consumption agency unemployment is very low. There may be some frictional unemployment but generally those facial expression for work are able to find it. It also means the economy is operating close to, or at full(a) capacity. To attain full employment the government could seek to increase aggregate demand. This increases real GDP and reduces cyclical unemployment; however as the economy gets close to full capacity it may acquire inflationary pressures; causing inflation to be above target. stock-still increases in the demand for labour go ons to grow and employers must conciliate existing workers overtime and entice non-labor force-out participants into the labor force by offering them higher wages. As wages increase, much people are go awaying to work but toil costs go on. If strong economic growth persists, wages pressures continue to build, leading to increase inflation (cost-push inflation). On the other hand, unemployment provides authorization for the economy to expand and can act as a downward pressure on inflation. Furthermore expansionary fiscal policies will cause higher consumer spending and therefore a rise in imports; this causes a current account deficit. This is particularly a problem in the UK, where consumers have a high bare(a) propensity to consume imports.

However, it is possible to attain full employment through different approaches. To reduce unemployment, the government may consume provide side policies. For example, making labour markets more flexible, increasing incentives to work, better education and training e.t.c. These policies can reduce the graphic rate of unemployment without causing inflation. In fact some supply side policies which increase productiveness may actually attend to reduce inflation. Also, if the policies are successful in increasing productivity it will increase the competitiveness of UK exports and therefore improve the relief of payments current account. With high unemployment rates, the existing labor surplus implies that employers... If you fate to get a full essay, order it on our website: Ordercustompaper.com

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