Macroeconomics- Unemployment Essay

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Unemployment is “people of working age who are without work, available for work and actively seeking employment”(Blink & Dorton, 2007). A recession is “a period of temporary economic decline”(Google), and is clear in the UK, that unemployment-levels are rising due to this. The number of people unemployed is referred as “the pool of unemployment”(Blink & Dorton, 2007), and factors that cause a rise are known as “inflows”. This diagram portrays the UK’s “macroeconomic-labour market”(Blink & Dorton, 2007), which represents the total demand and supply for labour within the economy. Hence, total demand or the ‘Aggregate Demand’; ADL (“total demand for labour at any average wage rate”(Blink & Dorton, 2007)) for labour is inclusive of all its forms (ranging from production workers, to bankers) that are involved in producing good’s or services in an economy. Thus, the ADL curve shows the levels of demand at any given Average Wage rate. At a lesser Average Wage rate, producers’ demand for labour increases, hence the downward-slope. But, as it increases, firms will undoubtedly reduce the amount of workers they employ. The Average Supply Curve (ASL) shows the number of workers that can and/or will work at different Average Wage rates. The upward slope is because, at a higher rate, more are willing to work. The type of unemployment found in the UK is disequilibrium-unemployment, which “occurs when there are conditions that prevent the labour-market from reaching its equilibrium”(Blink & Dorton, 2007). This is further broken down into cyclical-unemployment, where the “economy reaches a point of slow/negative growth, and sees a fall in AD”. Possibly because consumers rather save than spend due to the situation of the economy, thus leading to a fall in demands for labour, as firms will slash production, to make minimal profits. This is
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