Creating Employment, Essay Example

The modern global economy is characterized by erratic and unexpected turns and shifts within the business cycle. Amid the changes within the business cycle, certain aspects of the economy are directly affected causing undesirable socio-economic outcomes. One of the biggest problems facing most economies post-recession is unemployment. Given the chance to occupy the president’s office, I would employ a number fo techniques to ensure a considerable reduction in the level of employment.

Free Public Education

A considerable portion of the budgets for major economies is dedicated towards defense. Defense consumes a considerable portion of most budgets, a good example being the United States. The United States Defense department uses approximately $800 billion on a yearly basis. Educating all college-bound students through college would cost the government approximately $70 billion. Realizing free college education for all college-bound systems is a feasible endeavour.

One of the biggest deterrents to college education for most college-bound students is the high cost of education. This usually leaves students with the alternative of student loans that are usually costly in the long-run.

Local Industries

International trade emphasizes in the creation of markets for products from trade partners. However, when one of the trading partners has veto power by virtue of financial superiority, they tend to control the given industry at the expense of the local industry. Realigning Trade agreements to protect local industries is integral to creating employment opportunities for the workforce.

The government has to protect its local industries to protect employment for its citizens. Government can achieve this by promoting local businesses through foreign marketing. Small business do not have the capacity to take advantage of globalization. Government can enhance growth of local businesses, increase capacity for employment as a result.

Headline Inflation

Inflation policy is important in influencing the level of unemployment within a given country. The Fed has developed policies that are meant to specifically target headline inflation as opposed to core inflation. Instead, core inflation is used as an indicator. By controlling headline inflation, the Fed can influence the labor market by increasing circulation of disposable income within the economy to instigate investments. These investments lead to increase in aggregate demand for labor as corporates and employers have more money to pay employees.

Monetary Policy

If the economy slows and unemployment increases, the Federal Reserve is inclined to ease monetary policy to stimulate aggregate demand. When aggregate demand in increased and the economy begins to grow, unemployment will decrease and the economy will return to a more favorable path. The growth of potential output is reflected in the outward expansion of the production possibilities frontier. As you may recall, essential factors causing growth in the production possibilities frontier are increases in resources (e.g., the labor supply) and changes in technology. The aggregate supply should be assumed to remain constant in the near future though with incorporation of computers in production process in the long run will enhance productivity. If the economy shows signs of growing too fast and inflation increases, the Federal Reserve will tighten monetary policies to force aggregate demand below the potential of the economy to produce. They will keep these policies in place for as long as necessary in order to relieve inflationary pressures and to return the economy to a more favorable path