Policies to correct unemployment

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In this video we’ll examine the policies a government can use to correct, or reduce, unemployment. These policies include both demand side and supply side measures. We’ll then evaluate the effectiveness of the policies suggested. Expansionary, or reflationary, monetary or fiscal policies aim to decrease unemployment by increasing aggregate demand. A government typically has two options here, monetary and fiscal policy. Supply side policies focus on increasing the level of potential-output of an economy by reducing the natural rate of unemployment and increasing the size of the labour force. However, no government policy serves as a magic bullet and there will always be an opportunity cost to government expenditure.