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What causes unemployment?

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βˆ™ 2011-08-09 18:33:15

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Unemployment is caused by economical collapse, such as the Great Depression of the 1930's. Since Supply & Demand is the sole factor on the economical scale, if items are not sold or bought within a country, then that country will literally close businesses since nothing is being purchased and workers will lose their jobs. Employment is based entirely on sales and stocks, or simply put, Supply & Demand.

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From a Keynesian perspective, full employment occurs where an economy is at full employment. Therefore, unemployment is caused by a decrease in aggregate demand for firm's goods and services, meaning that they do not produce as much and do not require as much labour - creating unemployment.

The Classical theory of unemployment is where firms cannot make a profit from the sale of goods and services due to a higher cost of employing workers.

2011-08-09 18:33:15
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