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Unemployment Reduction through Supply-Side Policies

Question

Discuss whether or not supply-side policy measures can reduce unemployment.

Category:

Unemployment

Frequently asked question

Preview Answer

I. 🍃Introduction
- Explanation of the importance of reducing unemployment
- Overview of the different methods that can be used to reduce unemployment

II. Methods to reduce unemployment
A. Economic policies
➡️1. Decrease corporation/profit tax
- Explanation of how this can lead to more investments and demand for labour
- Reduction in cyclical unemployment
➡️2. Decrease interest rates
- Explanation of how this can lead to more borrowing, investment, and demand for labour
- Reduction in cyclical unemployment
➡️3. Decrease income tax
- Explanation of how this can increase disposable income, spending, production, and demand for labour
- Reduction in cyclical unemployment
➡️4. Government subsidies
- Explanation of how this can encourage firms to expand and take on more workers
- Reduction in cyclical unemployment

B. Education and training
➡️1. Increase spending on education and training
- Explanation of how this can increase skills/productivity of labour and demand for labour
- Reduction in structural unemployment

C. Information and benefits
➡️1. Provide more information on jobs/job centres
- Explanation of how this can decrease frictional unemployment
➡️2. Reduce unemployment benefit
- Explanation of how this can decrease frictional unemployment

III. Reasons why these methods may not work
- Explanation of potential time lags, technological development, education programmes not according to market needs, privatisation, decrease in minimum wage, and lack of total demand

IV. 👉Conclusion
- Summary of the different methods to reduce unemployment
- Importance of considering potential drawbacks and limitations of each method

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