Question

Employment Issues during Covid-19 pandemic. Give proper Introduction to the subject which covers definition and concepts. and conclusion.  its a 20 mark answer.

Answer 1

During Covid - 19 pandemic the foremost economic problem arises is unemployment or we can say decline in unemployment. This has affected economy drastically. It has lead to slow economic growth.

Because of unemployment , and low aggregate demand recession arises which can be defined as current output level has fall short of output at full employment level. At full employment level we have structrual and frictional unemployment but because of impact of covid -19 on output and employment it has created cyclical unemployment.

CYCLICAL UNEMPLOYMENT- It is the type of unemployment when Aggregate Demand fall short of aggregate demand at full employment level. This occurs because of slow economic growth.

RECESSION- Recession shows decline in economic activity in real GDP, income, employment etc. It also creates recessionary gap . Gap between current output and output at full employment.

This situation can better be explained with the help of graph-

In the above graph, we can see that or horizontal axis employment/ GDP is taken and on vertical axis price level is taken , AS is the short run aggregate supply, AD is the aggregate demand and LRAS is long run aggregate supply. Where these three graphs intersects that shows iniitial equilibrium at full employment level which is shown by Y* at this level there is structural and frictional unemployment and Now assume there is Covid -19 pandemic that lead to decrease in AD curve so i have represented this by AD1. so out put decrease from Y* to Y1 which occured due to decrease in aggregate demand so we have less output level and this also creates cyclical unemployment at this Y1 level of output. It shows negative output gap and also demand for labor decreases and unemployment rises.

Therefore, we can say that covid - 19 pandemic firstly affect aggregate demand that lead to decline in real GDP and also lead to increase in unemployment that lead to slow economic growth and have recession in the economy.

This situation can be corrected by adopting policy measures by the government and central banks.