ECN 101 Lecture Notes - Lecture 27: Output Gap, Dependency Ratio, Building Society
Document Summary
Unemployment is a problem because it imposes costs on society and the individual. The cost of unemployment to a nation can be categorized under three headings: the social costs, the cost to the exchequer and the economic cost. The social cost of unemployment: for the individual, there is the demoralizing effect which can be devastating particularly when they are old. Unemployment represents a terrible waste of resources and means that the economy is producing a lower rate of output than it could do if there were full employment. This leads to an output gap or the loss of the output of goods and services as a result of unemployment. The measures appropriate as remedies for unemployment will clearly depend on the type and cause of unemployment. Demand management policies these policies are intended to increase aggregate demand and, therefore the equilibrium level of national income. They are sometimes called fiscal and monetary policies.
