Im working on a paper, and was looking for everyday thoughts on a crazy situation, like the unemployment rate going up 10 percent. What would you do. How would it effect the economy?
2007-12-09 13:21:10 · 4 answers · asked by Rio 2 in Social Science ➔ Economics
The unemployment rate reached 10% in 1983 and most young people couldn't get jobs and moved back to their parents home after they finished college.
2007-12-09 14:07:26 · answer #1 · answered by meg 7 · 0⤊ 1⤋
Well...if I was the Chairman of the Federal Reserve...I would probably lower the federal funds rate...in hopes to decrease the interest rate. This should increase investment spending, which should create more jobs and reduce the unemployment rate. This may take up to 2 years after decreasing the federal funds rate for the public to notice the effects.
Another alternative is to increase government spending (which will strain the government budget and probably put it in a deficit). The government could also increase transfers to the citizens or decrease taxes, but the effect isn't as great as increasing government spending because consumers have a marginal propensity to consume. (Fundamental Macroeconomic Principles)
You should read more about Fiscal and Monetary Policy..
2007-12-09 14:50:24 · answer #2 · answered by JHU[Chris] 2 · 1⤊ 0⤋
Wages would fall. With lowered wages, we would slowly see more people working and unemployment would drop.
2007-12-09 14:21:03 · answer #3 · answered by ThumbPrints 2 · 1⤊ 0⤋
Well, I'd say there's a 10% chance I'd NOT be working.
2007-12-09 15:46:22 · answer #4 · answered by KevinStud99 6 · 1⤊ 0⤋