πŸ“ˆ Economics

Why does the government target a low rate of unemployment?

1 answers
Will FrankfurtI love learning and making complex things easy to understand.17.5k students helped

Low unemployment is usually a good thing because: 1. It helps the government achieve one of their main macro-economic objectives. 2. It helps economic growth as consumers can spend more. Since consumer spending is a component of aggregate demand, the AD curve shifts to the right. 3. Higher employment means more tax money for the governments. As above, government spending is a component of AD so another reason the curve will shift to the right. That should be enough to get you started. Oh, and happy holidays πŸŽ…