What Is Unemployment
The-General- Theory-of-Employment-lintiest-and-Money. PDF What Is unemployment: Somebody who are able to work can not find a job or People, who Is actively seeking for Job, is unable to find one. – The economic system change everyday, Says Law or law of market had been obsolete. – In his book, A General Theory of Employment, Interest and Money, Keynes counter the classical law of market – He focused on how government spending will affects on unemployment rate. His reason are: o Save and invest is what people do with their money.
Investment depends on how much profit it will bring back to the business, this is due to the business cycle and new technology. O More investment will create job for people and results in an increase of output. O Saving, on the other hand, will not automatically match with invest, because somebody will keep their money in form of cash. O When there is no investment, due to these reasons. Unemployment happens – > over-production because the people have no money to spend depression – Keynes believes that depression will continued indefinitely.
No saving because of owe interest rate plus people will withdraw money to survive ->no investment unemployment no money no saving on and on. – He suggested that governments should spend money to fill the gap between saving and Invest. A free market need continuous consumption, therefore, with the government spending, the people will be able to buy. – From buying good that remain unsold, business will have the ability to hire people to produce and in turn, reduce unemployment, stop depression. – According to Keynes, spending will benefit the economy, due to multiplier effect.