Question

Question 3

1. Ram was working as a production supervisor in an electronic factory. Recently, he lost his job due to the economic slowdown caused by COVID 19 pandemic. Explain Ram’s type of unemployment. Explain the most suitable method to reduce this type of unemployment.
2. Seetha becomes unemployed with the introduction of a minimum wage. Explain the effect of minimum wage on the demand and supply of labor. Explain Seetha’s type of unemployment. Describe the most suitable method to reduce this type of unemployment.

Answer 1

1 - Ram is suffering from cyclical unemployment. Hence the government will have to provide the stimulus in the form of increased spending so as to invest money in projects such as roads , highways etc. This will provide them with the employment and help to reduce the unemployment rates.

2 - Due to the implementation of minimum wages , the supply here will exceed the demand. Hence there will be surplus of labor in market at wages above equilibrium. This type of unemployment will be called structural unemployment. To reduce this , the government can provide subsidies to employers to reduce their cost and help them in hiring more. It can set up more public institutions in order to provide employment to these unemployed people.