Essay: Decreasing the Unemployment Rate

Sample Essay

Also, all the troubled countries have planned to increase expenditure on infrastructure. This is theoretically a great way to decrease the unemployment rates and, also as incomes rise, domestic spending will also increase simultaneously. In the long term this will have an added bonus because spending on better transportation and communication channels will increase the efficiency of the economy and provide a much needed boost to productivity. In practice however, it is difficult to implement. For example, there has been news that China plans to inject over a hundred and twenty five billion dollars into their health care system sounds very impressive but a lot of things can go wrong.

According to the article, one of the major explanations put forth by most people for the decrease in domestic consumption is that the people in these Asian countries tend to save in the present and consume in the future and this will increase due to high uncertainty regarding pension plans and also due to the global recession. However, this explanation is erroneous because savings in households have not increased in the period, rather they have decreased. If savings are decreasing, then consumption should be on the rise but that is not the case. The reason for lagging consumption is that incomes arising from wages have decreased in proportion to Gross Domestic Product (GDP).

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