Should the US aim to achieve a low unemployment target List

Should the US aim to achieve a low unemployment target? List the arguments on each side of this debate. What are the strongest two arguments on each side? What policies are needed to achieve this target? What do you recommend?

Solution

Yes, US should definitely try to achieve low unemployment target for the benefit of its citizens.Not only US most of the countries strive to achieve low unemployment target since by ruling out unemployment, the government can ensure free flow of money in the economy. The ratio of consumer spending will increase. When the consumer spending increases this will lead to an increase in production. Hence the ratio of supply and demand can be ensured. The investment will increase if people are able to earn higher wages. Employment is directly related to .income of people and increase in this wages will initiate increase in consumer spending. All these are inter-related. Hence US should strive to achieve low unemployment target.

Hence achieving low employment target will:

1.Increase Consumer spending

2. Maintain supply and demand in the economy

Effective monetary policy will have to be in place in order to lower unemployment ratio in the country. Monetary policy involves policies for changing the interest rate and influencing the money supply.

No, US should not try to achieve low unemployment target since to avoid unemployment it has to increase the loans offered to businesses. Only when the country comes forward with lending options with least interest rate the businesses will be able to fourish. This will only increase the country\'s total expense, When the nation\'s expense increases, it will try to recover its expenses by means of tax. The tax slabs will be raised. Hence when the government tries to maintain the unemployment target it will have to do the following:

1. Increase government\'s liability or government expense will increase.

2. Increase the tax rates.

An effective fiscal policy should be in place in order to change tax rates and influence the amount of government spending. This in turn will influence the aggregate demand in the economy.

I would strongly recommend a strong monetary policy because when people are given employment they will take care of themselves along with the economy. Hence, people should be allowed to work and gain confidence.