Economics is the social science that analyzes the production, distribution, and consumption of goods and services.

Monday, 3 October 2011

Policies to reduce unemployment

 Policies to reduce unemployment

i           Open Market Operation

Open market operation is a policy of buying and selling government securities by the central bank. During recession, the government will buy back bond and securities in order to increase aggregate demand. So, total unemployed can be reduced.

ii          Interest rate

Interest rate can be used to encourage more investment. To reduce unemployment the central bank can reduce the interest rate in order to encourage the investment and thus create more jobs opportunities.

iii         Fiscal policy

The government use the fiscal policy by government expenditure and taxation. To reduce the unemployment, government will spent more, for example built more new infrastructure. So, these can create more jobs opportunities.

iv         Direct control

To reduce unemployment, government should be build more retraining facilities. For example MLVK, entrepreneur industrial training skill and others.