paper for econ - unemployment
...rd struggle unemployment rises and when the economy improves unemployment then falls. The global rise in unemployment was caused by changes in the price of energy, in the mid- and late-1970s, and possibly also in the price of capital in the early 1980s. As consumers know, prices continue to go up more than go down. This, in a simple definition, is called inflation. When you run into a situation like this, it is known as the cost-push theory. To go more in depth, it is when producers raise prices to meet increased costs. The demand-pull theory is different because it states that inflation occurs when demand for goods and services exceeds existing supplies. To give a perfect example would be during wartime. The government puts much pressure on produces because the demand for new equipment and supplies are so high. This then causes the equipment to become more valuable forcing prices to go up. There are many external costs regarding unemployment. For instance, as the unemployment rates increase the average employed citizen must pay tax dollars. This causes many problems across the country because even though it may feel like you have a good job and are not unemployed, you have to take more money out of your paychecks due to the high unemployment rates. This then makes up for unemployment compensation but leaves the working person with a lower income. To solve these problems in the economy, a solution could possibly be to decrease government spending and demand for certain equipment and concentrate more on unemployed people. By giving unemployed people a tax cut for the first year would then give them money and a chance to start a job. A tax cut is a reduction in the rate of tax charged by a government. This solution would work the best because it would then give hope to those who are unemployed. They would basically be able to start over wi...