Discuss Unemployment and Demand as Economic Factors - 2200 Words

Discuss Unemployment and Demand as Economic Factors (Research Paper Sample) Content: Studentà ¢Ã¢â€š ¬s NameProfessorà ¢Ã¢â€š ¬s NameCourseDateEconomicsUnemployment: Background InformationUnemployment is a critical matter of consideration in economics because it provides a lot of significant information regarding the financial progress of the country under consideration. The term is used to refer to the total number of people in a country who do not have jobs but are actively searching for employment (Prasch et al. 66). In fact, its rate in a given nation is the percentage of the extent to which joblessness is prevalent in a given economy. In order to achieve the numerical quantification of this function, the total number of the people without employment is divided by the population of the entire labor force.The result of this computation usually provides a percentage. Employment rates often intensify during economic difficulties like when there are recessions (Prasch et al. 66). This has remained a global challenge for several years in spite of the developmental progress which has been witnessed in various parts of the world. In fact, even the most developed nations like the United States, the United Kingdom, and Australia remain sufferers of unemployment cases. Based on the results of the research conducted by the International Labor Organization, the prevalence of joblessness across the globe was 6%. This figure translated to above two hundred million individuals. This discussion focuses primarily on the analysis of the idea of unemployment and the corresponding aspects associated with it.Types of UnemploymentDue to the dynamic and complex nature of unemployment, various scholars such as Karl Marx came up with various criteria and theories for the classification of this phenomenon. As a result, it is possible to describe the category of a given form of unemployment based on the characteristics associated with it. The cause of a given form of joblessness can also be a very instrumental tool for its categorization.Classical U nemployment. To develop a clearer understanding of this concept, it is necessary that one considers the definition of the term "unemployed individual." Such a person must not only be jobless but also actively searching for one. The idea of classical unemployment is the situation whereby the wages associated with a given line of work are raised so much that they exceed the clearing levels of the market. It is a logical argument that raising the salaries has an impact of attracting more workers to register interest in a particular job (Prasch et al. 72). Considering this trend, the amount offered to employees is directly proportional to the number of individuals who would be interested in such jobs. Increasing wages above the market-clearing levels would indeed cause an influx of those looking for such vacancies. As a result, there would be more applicants than the available opportunities. Those who fail to obtain such chances are said to be classically unemployed. Modifications have been made on this concept to accommodate the cases whereby the wages are lowered below livable limits. Most people will opt to quit such jobs and remain jobless.Cyclic Unemployment. Cyclic joblessness is also referred to as the Keynesian unemployment. This situation arises whenever the aggregate supply available in the economy is not sufficient to support the employment requirements in a given locality. The implication of this kind of a scenario is that the job-seekers are not able to benefit from the supply of goods and services within the region due to the insufficiency of the latter. The corporate sector is the biggest employer in any country. For the opportunities to be enough within the nation there is always the need to have sufficient supply coming out of this sector. More manufacturing activities in an economy encourage the need for a larger workforce (Praschet al. 75). These conditions result in the creation of more employment opportunities and vice versa.Structural Unemplo yment. This kind of unemployment is very common in almost every part of the world. The underdeveloped countries form the largest portion of the places in which this type of situation is most prevalent. In such a case, there are jobs in the labor market, but the job-seekers cannot obtain these opportunities because of the mismatch between the required skills and the ones possessed by the applicants. It has been observed that the immigrants who move into the developed countries have often faced this problem (Prasch et al. 106). These people come from countries in which the structures of education are different from their respective host nations. The result is that they are incapable of integrating themselves into the labor markets primarily because their qualifications are not resonant with the ones demanded by the available opportunities.Frictional Unemployment. The labor market is very dynamic and a series of recruitments and dismissals characterize the activities in this sector. Mo st people who already have jobs may decide at some point to resign due to various issues (Prasch et al. 110). Others are relieved of their duties based on the conditions attached. Those who lose their present employments are bound to make attempts to find replacements. The term frictional unemployment refers to the time interval during which a person is searching for another job. It also denotes the duration when an individual is transferring from a given employment to another.Impacts of Unemployment. Elevated cases of unemployment in a country can have various consequences. These effects can either act on the economy or the general society. The main economic impacts include the cost incurred due to the existence of this problem, the deteriorations in the spending powers of the citizens in the country and the risk of recession. When the rate of joblessness is high, the government suffers a lot of financial burdens. For instance, there would always be the need to ensure that products are subsidized so that these people can be able to afford them (Prasch et al. 115). Those living below the poverty line are revenue drains to the national treasuries since the amount spent on them is way higher than their contributions. The reduced purchasing power also kills the corporate sector since it deprives them of the market for their products. In cases where unemployment becomes extremely high, the country may suffer from economic crises such as recessions. The effects that this phenomenon has on the society include mental depression, general health problems, political issues and insecurity. Those who fail to get their desired jobs may end up frustrated and depressed leading to increased cases of mental diseases. The poor cannot afford medical services, a condition that would result in increased cases of health complications. The loss in political contributions towards the eradication of unemployment could cause political instability in a country. Also, high prevalence of joblessness leads to the emergence of criminal activities in the society.Demand: Background InformationThe corporate sector relies very much on the consumers around them since the properties of these individuals determine the ability to obtain a sufficient and sustainable market for the products offered. The customers for different products are known to exhibit several differences that dictate their tendency and ability to use certain products. By definition, the term demand refers to the willingness and the ability of consumers to purchase a given quantity of a commodity at a particular price (Praschet al. 129). The consumers may at times desire to buy a particular product at a specific cost but are not in the position to afford such a good. On the other hand, there are times when people would be capable of purchasing products under given conditions but there are not willing to. These two cases cannot be regarded as demand because the latter only becomes existent when all the requ irements are met according to the definition. This concept is very instrumental because it dictates various aspects of the economy and controls the behaviors of the producers or the suppliers of different goods and services. The demand of products in an economy is affected by various factors most of which define the consumers' nature, statuses and characteristics.Factors Affecting DemandDemand is very dynamic and can be changed by any alterations made on the key determinants. The main factors that affect this phenomenon include the price of the product, the income levels of the consumers, the tastes and preferences of the customers, the cost of related goods and the consumersà ¢Ã¢â€š ¬ expectations of the changes in the future prices of the product under consideration.The Price of the Product. The price of a given commodity is generally a principal determinant of the product especially if the goods are not inferior (Praschet al. 131). The demand for a given good is usually inversel y proportional to the price of the commodity (law of demand). The main implication of this statement is that the customers are always willing to buy more when the prices are low. Also, a larger number of the consumers will be willing and capable of purchasing any quantity of a commodity when the prices are lowered. This condition reveals an important quality of buyers; they always desire to receive maximum utility at minimum prices.The Level of Income of the Consumers. This is strictly an economic factor which had a very significant impact on the purchasing habits of the customers. The rationale behind this claim is similar to the situation linking the changes in prices and the demand for a product. The consumption is all about the ability to buy, and the consumer's income dictates the extent to which they can spend. The salaries of the consumers dictate the purchasing powers of s...