Answer to Question #209374 in Macroeconomics for shaz

Question

Between 2011 and 2016, UK unemployment fell from a high of 8.5% to 4.8%. Some argue that government attempts to reduce unemployment inevitably lead to trade-offs with other macroeconomic policy objectives.

Discuss the view that falling unemployment will inevitably lead to trade-offs with other macroeconomic policy objectives.

Answer 1

Trade-offs link macroeconomic objectives and employment with the increase in demand for labor. Therefore, a particular organization will employ more workers to fulfill its interest in the economy. An increase in demand expands the economy. A fall in unemployment will result in to increase in consumption. A decrease in economic expansion balances with an increase in unemployment. An increase in the expansion of the economy balances with decrease unemployment. Philip's curve indicates that if there is a decrease in economic inflation. Therefore, it will result in falling unemployment hence a trade-off linking fall in unemployment and other macroeconomic policy objectives.