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Brain-drain
Protectionism + isolationist - politically blamed on international competition, long-run making country lose
internatoinal competitiveness
Budget deficits - lower tax, increasing expenditures + support for unemployed
Types of
Description
unemployment
Causes
Possible solution
Structural
Workers are unable to find
1. Globalization
unemployment work because their skills do
2. outsourcing (privatizing) of
not match those demanded by
secondary and tertiary sector jobs
firms (i.e. technological
3. new technologies that automate
advancements)
processes which used to require
labour
Considered natural because
GDP makeup will change so
chill and learn
Improve training,
education and mobility of
labour force to encourage
relocation as demands for
labour change in regional
areas
frictional
Chill no problem
Short-term + voluntary
Switching careers, etc.
seasonal
chill
cyclical
natural
1. In cost-push inflation (can be
triggered by demand-pull) firms will
lay off
2. Most dangerous: DEMANDDEFICIENT DEFLATION - lower
demand, short-term sticky wages so
firms have to lay off, therefore
cyclical, therefore less purchasing
powerf, less AD, downward pressure
on wages….
Unemployment when the
economy is producing at full
employment output level
(frictional + structural +
seasonal)
Macroeconomic objective: Low inflation
Inflation
An increase in the average price level of goods and services in a nation, sustained over a prolonged
period of time.
• Money less valuable; Less buying power
• Future devaluing urges purchase NOW - trigger positive feedback loop
Low inflation is beneficial