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  • Created by: majamic
  • Created on: 25-10-15 22:50
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  • POLICIES TO REDUCE UNEMPLOYMENT
    • D-side/D-def/ Cyclical
      • Fiscal & Monetary policy
        • Pursue exp fisc pol by cutting income tax to boost consumer spending and AD 
          • Negative
            • Tax cuts may not always work
          • This would boost consumer disposaincome and hopeful boost consumer spending.
            • Higher AD should
              • lead to higher eco growth
              • encourage firms to employmore workers
          • This policy will be effectiv for reducinD-def unemplwithout causing higher spendi
            • Expansionary fiscal policy increases AD leading to higher Real GDP.
              • As output increases firms Deman more workers
      • If unempl caused by eco downturn (low/-eco growth)
        • ->      D-side policies to try & increase AD.
          • Pursue exp fisc pol by cutting income tax to boost consumer spending and AD 
            • Negative
              • Tax cuts may not always work
            • This would boost consumer disposaincome and hopeful boost consumer spending.
              • Higher AD should
                • lead to higher eco growth
                • encourage firms to employmore workers
            • This policy will be effectiv for reducinD-def unemplwithout causing higher spendi
              • Expansionary fiscal policy increases AD leading to higher Real GDP.
                • As output increases firms Deman more workers

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