Unemployment During The Recession Economics Essay

Unemployment During The Recession Economics Essay The unemployment rate is one of the key variables that policy makers are interested in. There are different causes of unemployment and it is very difficult for governments to determine which causes are most important and how to deal with them. The two main types of causes of unemployment can be split as demand-sided and supply-sided. The unemployment has both economic and noneconomic costs (McConnell and Brue, 2005). The economic costs of unemployment are; (i) decrease in income and output which is measured in terms of the GNP gap and, (ii) burden of unemployment is not distributed equally among employees especially during recession periods (Petroff, 2002). On the other hand, loss of self-confidence, social and political conflicts can be counted as some of the noneconomic costs of unemployment (McConnell and Brue, 2005). Thus, it is important to analyse causes and outcomes of unemployment especially during recession period. Unemployment during Recession Since Industrial Revolution, the entire world economy has gained a momentum. This momentum has led to economic expansion an increase in quality of life. However, this momentum hasnt shown continuity. Countries have experienced many ups and downs in their economic activities since they industrialized. These up and down movements in economic activities or in production level are known as business or economic cycle (Parkin, 2012; Abel et al., 2008). There are two main periods of the business cycle (Parkin, 2012); expansion and recession. An expansion is a period which represents an increase in the economic activities and production level of an economy/country (Burda and Wyplosz, 2001). Contrary, recession is an extended time period when the economic activities and gross domestic product (GDP) of a nation are slowing or falling down (Abel et al, 2008; Harris, 2002). These activities are including level of employment, investments, household income, business profits and inflation rate. In a business or economic cycle, recession occurs between peak and trough points. It is also known as a business cycle contraction. This is represented in the Figure 1. -Causes of Recession: Negative Demand and Supply Shocks According to Abel et al. (2008), two main causes of economic recession are negative aggregate demand shock (ADS) and negative aggregate supply shock (ASS). A negative ADS is a sudden event that decreases the aggregate demand in an economy (Burda and Wyplosz, 2001). There are several reasons for this type of negative shock. It generally occurs because of tight fiscal and monetary policies (Abel et al., 2008). Government sets high taxes and reduces government expenditures to decrease the inflationary pressures. On the other hand, these policies can causes a fall in the aggregate demand and as a result economic recession takes place. The recession that United Kingdom (UK) experienced during 1980-81 was caused by tight fiscal and monetary policies (Pettinger, 2012). There were high tax rates, low government expenditure, and high interest rates for reducing spending, consumption and investment. The UK government was applied these tight policies for reducing the inflationary pressures whic h was formed in the late of 1980s. Inflation had fallen but the cost of these policies was the economic recession. Classical economists suggest that the negative ADS do not cause continued fluctuations in output level (Burda and Wyplosz, 2001). However, they view that a negative ASS is a major reason behind the critical changes in output and employment level (Burda and Wyplosz, 2001). A negative supply shock or a negative production shock is an unexpected event that decreases the aggregate supply in an economy/country (Abel et al., 2008). A negative ASS causes an inward shift in the long run aggregate supply (LRAS) curve of an economy (Abel et al., 2008). In figure 2, there is an inward shift in the LRAS curve because of a negative supply shock. It is reducing full-employment output from Q1 to Q2 and increase the price level from P1 to P2. This change in the price level represents that a negative supply shock causes prices to rise during the recession. Some of the real world examples of negative supply shocks are; changes in weather, such as an unexpected cold weather; changes in the structure of industries, such as merging of two or more dominant companies (Abel et al., 2008). Sometimes, the dominant suppliers join together for increasing their market power. By this way, they can restrict supply and set higher prices for making more profit. The real world reflection of this happened in 1970s by the Organization of Petroleum Exporting Countries (OPEC) where members were imposed an oil embargo and then increased oil prices. When the oil prices rise, firms began to produce less since the cost of production was increase independently fro m aggregate demand. During oil price shock, labour demand, employment and real wage rate had fallen (Carlstrom and Fuerst, 2006). A negative supply shock reduces the quantity of labour demanded at any given real wage rate and causes an inward shift in the labour demand curve (Abel et al., 2008). In figure 3, the negative supply shock causes a fall in the labour market equilibrium from point A to B. At the new equilibrium both real wage and employment level falls. This graph also reflects the effects of oil price shock on the labour market. -Supply Side Factors During recession both businesses and individuals tend to retrench their economic belts and this causes negative effects on the level of production and consequently demands for labour decrease. Thus, during recession unemployment turns out to be one of the major problems on both government and society. Some of the unemployment during recession base on supply-side factors like personal transferable skills, job-seeker research channel, occupational mobility (job skills), and geographical mobility (Adams et al., 2000). For example; in UK, economic structure is turning to service based from manufacturing based economy (Parkin, 2012). The main reason of this structural change is globalisation and international trade agreements. According to Parkin (2012), UK has completely lost its cost advantages in manufacturing goods since the cost of production is much cheaper in Eastern Europe countries. Structural changes lead primary and secondary sector workers lose their jobs and many of them cann ot find new jobs since they dont have necessary skills for working in service sectors such as financial service institutions and information technology. However, even when economy is operating at full capacity, there is some unemployment that causes by the supply side factors. This is generally known as the natural rate of unemployment or equilibrium unemployment (Blink and Dorton, 2007). The natural rate of unemployment exists when the labour market is in equilibrium (Abel et al., 2008). In figure 4, the total labour force (TLF) in an economy and aggregate supply of labour (ASL), which stands for the number of people who are willing to work at every given wage rate, are presented. The difference between points a and b is natural rate of unemployment. The natural rate of unemployment is the combination of frictional and structural unemployment (Abel et al., 2008). Frictional unemployment occurs when employees leave their jobs for finding more suitable job opportunities in order to satisfy their career and income expectations (Parkin, 2012). While employees are searching for new jobs, there is always some frictional unemployment in th e economy. The poor job information may lead this searching process to take longer than what the employees expected and consequently employees may lose their motivations for finding new jobs. Unemployment benefits are also a factor that affect the incentive to not to work. Also, structural unemployment occurs when the structure or production methods of an industry are changed in order to keep pace with changes in consumers tastes and new production techniques (Sloman, 2004). Structural unemployment is generally known as the long-term unemployment since workers must retrain or they may have to relocate for staying at their current jobs or finding new jobs (Parkin, 2012). On the other hand, the financial and mental costs of retraining and relocation lead structural unemployment that contains geographical and occupational immobility. Housing prices are one of the most important financial problems that cause geographical immobility. For example; in London, the active capital city life creates more job opportunities than in the North of England, but housing prices and rents are much more expensive than in the North of England. So, some workers may prefer to take unemployment benefits and staying at their neighbourhoods rather than paying high rents or buyin g expensive houses in London. This causes geographical immobility. An increase in unemployment rate also increases the burden of the government. High unemployment means an increase in the total amount of unemployment benefits that governments have to pay. As a result of an increase in unemployment rate, governments revenues fall. So, it causes budget deficits. In order to decrease the rate of unemployment, government may use both supply-side and demand-side policies. The main aim of the supply-side polices is to make labour force more responsive and flexible against the changes in job opportunities (Sloman, 2004). However, if there is lack of aggregate demand, supply-side policies can be ineffective. Thus, for achieving more effective results government can support supply-side policies by using demand-side policies as well as fiscal and monetary policies. Conclusion In recent years, recession become one of the major problems that the entire world economies encountered. It is inevitable for governments to take certain measures to determine the causes of economic downturn. It can be caused by demand side or supply side shocks. During the recession, unemployment becomes one of the serious problems because of low levels of consumption, demand and investment (Pettinger, 2011). However, unemployment exists even when economy is operating at full capacity. Unemployment never becomes zero because of supply-side factors, like; personal transferable skills, job-seeker research channel, occupational mobility (job skills), and geographical mobility (Adams et al., 2000). Structural and frictional unemployment are unemployment types that cause by supply side factors. There are massive research efforts to find out causes of unemployment and how to deal with it. The long lasting effects of unemployment make it an important problem for all economies and governmen ts that encourage governments to try to find solutions for it since it has economic, social and political consequences.

Saudi Arabian Economy

Saudi Arabia is the largest Arab nation in Middle East Asia; Saudi Arabia has a population of more than 28 million and has an area of approximately 830,000 square miles. And has an oil-based economy with strong government control over major economic activities. Saudi Arabia possesses townie five percent of the world's proven petroleum reserves. When Saudi government signed agreement with standard oil of California (socal), allowing the company to explore Saudi Arabia for oil after a long search for oil that lasted around four years without success, the first success came with the seventh drill site in Dammam city in 1938. The economy of Saudi Arabia, mainly for oil, and hard it has the largest oil reserves in the world, an estimated 264. 2 billion barrels. And occupies the first place as the largest producer and exporter of oil in the world, where it plays a leading role in the organization of petroleum exporting countries (OPEC) to produce twenty nine percent of the total production of OPEC. In addition, the biggest turning point of the Saudi economy is Ghawar, it is by far the largest conventional oil field in the world and approximately sixty percent of all Saudi oil produced between 1948 and 2000 came from Ghawar and fourth largest reserves of natural gas, 240 trillion cubic feet, one third of this reserve is found in the Ghawar field. After explored the oil in Saudi Arabia, it become big change in the economic and government, focused on creation infrastructure, human resources development and non-oil economy, with the development of uplifting other economic activities such as handicrafts, mining and farming. For example, create and operation the cities of Jubal and Yanbu industrial create diversified economy and minimize rely on crude oil revenue Saudi Arabia economy is its response to the rapid economic variables on a global, regional and local levels Proof of this the successive jumps of the Kingdom in the standards world rankings year after year. And the kingdom occupies fourth rank in the â€Å"financial freedom† in the world rankings and has a tax system workbook ranked seventh in the world, one of the best tax systems to spur investment. It is one of the tony five largest economies in the world, which achieved a rank 24, and the largest economy in the Middle East and North Africa.

How My country save water Essay

I live in Saudi Arabia, people here consume water more than a person needs triple times on world level. Though that my country geographically considered one of driest regions in the world we have two main sources of water: Aquifers. Sea water (desalination). People waste water sometimes without even notice that: while they making ablution, washing a car, cooking, shower†¦etc. When Government noticed how people consumes water they took Preventive methods to save water, such as: Awareness campaigns through the media and educational pamphlets. Free water appliances (taps, shower heads, toilet boxes) were distributed, reportedly resulting in a decrease of residential water use of between 25-35%. Water reuse were way that Saudi handled this issue. Saudi recycler’s 40 percent of the water used for domestic purposes in urban areas. To this end, recycling plants have been built in Riyadh, Jeddah and other major urban industrial centers. For example, recycled water is used for irrigation of farm fields and urban parks, ablution water in mosques is being reused for the flushing of toilets. Dams are used to capture surface water after frequent flash floods. This water is used primarily for agriculture and is distributed through thousands of miles of irrigation canals and ditches to vast tracts of fertile land that were previously fallow. For me as member of my community I can contribute to preserve water: Use the water appliances that government distribute. Educate my community around me stringing with myself and family. Recycle the water that I use if I were able to. For example, while cleaning vegetables or fruit I can use the rest of that water in irrigate plants. Beware of water amount that I use. On the other hand my second example that I noticed here is public roads and how the traffic can be crowded usually in Riyadh. Since Riyadh start urban development, we have noticed how crowded the traffic can be.The road that you used to take to go from your home to your job takes 20 minutes now it  could take hour or more. I think Saudi still in the process of getting a solution. Government and people starts to find out what are the causes and solutions of this bad traffic which are: Most of the student and employees’ go as the same time 6:00 AM. So, as solution we may let them go on different timing. The huge transport trucks move freely at any time. So, as a solution determining time for these trucks at certain time a day Absence of strict rules to those who disobey the system while driving. Also, as solution traffic police should apply the rules with more strict on those who break the law. And more solutions that government or people can do; Have different transport way than cars. That’s why Saudi now is heading to build Riyadh metro expected to start running on 2018. Some youth like Muhammad Al-Farris, who create an app called (Zahma O La) on play and apple store. Google maps can show traffic line. My Resources: Wikipedia,Riyadh Newspaper, Dr.AbdulRahman M. Saleh article Crowded at Riyadh City.

Kyle Carpenter Hero Of The Ages - 841 Words

Sam Overman Mrs. Drayton English 1 2A 9 February 2016 Kyle Carpenter â€Å"Hero of the Ages† â€Å"Blessed be the LORD my rock, who trains my hands for war, and my fingers for battle†~ Psalm 144. On October 17, 1989 in Jackson, Mississippi, an American Hero was born, his name is William â€Å"Kyle† Carpenter. Mr. Carpenter enlisted in the U.S. Marine Corps at age 19 in February 2009 and completed boot camp in July 2009. Kyle Carpenter should be the Hero of the Ages because he jumped on a grenade, he also encourages people, and is an ambassador of sorts for the United States Marine Corps and its wounded warriors. A U.S Marine Corporal shielded a team of â€Å"Devil dogs† from a hand grenade. According to the New York Times U.S. Marine, Carpenter threw his body on a grenade to shield his fellow â€Å"Devil dogs† in 2010 in Afghanistan. Hand grenades are one of the most awful weapons of war. (www.thewhitehouse.gov). When you jump on a grenade you are not a regular person anymore you are brave, a hero, and very loyal to your men that you would give your life to save other people from a explosive. According to the New York Times, on Thursday June 19, 2014, Carpenter was recognized for being brave and being selfless. His bravery allowed him to be awarded the Medal Of Honor. The Medal Of Honor is the highest military honor. Awarded for personal acts of valor and going above and beyond the call of duty. The evidence given above proves that Carpenter is humble,brave,very loyal to his men,and a hero.Show MoreRelatedHeroism : A Brave Soldier1054 Words   |  5 Pagesbeing a hero and help ing others. For example, Dale Beatty, a National Guardsman, was driving in a Humvee in Northern Iraq when he drove over an anti-tank land mine. His legs were pinned down underneath the wreckage. He had to get them amputated. Even though lost his legs fighting for our country, he had a positive outlook and attitude from the very beginning. He started Purple Heart Homes, a nonprofit organization that helps provide homes for disabled veterans. Another example of a hero is HelenRead MoreHonor Of Honor By Marcus Brutus1263 Words   |  6 Pagesspecified as someone who is respected, has a good reputation, and who is genuinely a good person. With this denotation in mind, some people might suggest that honor has not changed over time because some people were looked upon as honorable in the middle ages. For example, Julius Caesar and Marcus Brutus were both perceived as honorable men throughout the play. However, this depends on someone’s interpretation of honor because the Merriam-W ebster definition stated that honor is described as someone whoRead MoreThe Changing Nature of Family Life in Contemporary Society Essay3339 Words   |  14 Pagesorder to kill a young woman, Sarah Conner. In response, a lone freedom fighter from the future, Kyle Reese, is sent back also, to protect her. In The Terminator though, the fear evoked by the Cyborg killer, is a fear of mindless, systematic, rationalized behavior. This is similar to other such Horror/Slasher/Killer movies of the time, such as Halloween, (Director John Carpenter, US, 1978) or Friday the 13th (Director Sean S. Cunningham, US, 1980) Similarly, the themeRead MoreStephen P. Robbins Timothy A. Judge (2011) Organizational Behaviour 15th Edition New Jersey: Prentice Hall393164 Words   |  1573 PagesDisposable Worker? 35 vii viii CONTENTS 2 2 The Individual Diversity in Organizations 39 Diversity 40 Demographic Characteristics of the U.S. Workforce 41 †¢ Levels of Diversity 42 †¢ Discrimination 42 Biographical Characteristics 44 Age 44 †¢ Sex 46 †¢ Race and Ethnicity 48 †¢ Disability 48 †¢ Other Biographical Characteristics: Tenure, Religion, Sexual Orientation, and Gender Identity 50 Ability 52 Intellectual Abilities 52 †¢ Physical Abilities 55 †¢ The Role of Disabilities 56 ImplementingRead MoreDeveloping Management Skills404131 Words   |  1617 Pagesother words, and despite the technological resources we have available to us, the same basic human skills still lie at the heart of effective human interaction. In fact, human relationships are becoming more important, not less, as the information age unfolds and technologies encroach even more upon our daily lives. Most of us are exposed to more information each day than we can possibly pay attention to. More than 6,000 business books are published each month. Moreover, no m echanism exists to organize