Policies to Reduce Unemployment
Learn about this Module 2 Topic in the CAPE Economics Unit 2 Syllabus.
Author:Krish Beachoo
Edu Level: Unit2
Date: Oct 11 2025 - 7:47 AM
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NOTE:
- Fiscal Policy deals with Government Expenditure and Taxes.
- Monetary Policy deals with Interest Rates and Money Supply.
POLICIES TO REDUCE UNEMPLOYMENT
1. Expansionary Fiscal Policy
This deals with INCREASING Government Expenditure and DECREASING Taxation.
As a result of increasing government expenditure and decreasing taxation, aggregate demand increases resulting in a fall in unemployment.
2. Expansionary Monetary Policy
This deals with DECREASING Interest Rate and INCREASING Money Supply.
As a result of decreasing interest rate and increasing money supply, investment will increase leading to an increase in aggregate demand resulting in a fall in unemployment.
Types of Unemployment and Policies to Reduce Unemployment
| Types of Causes of Unemployment | Solution/Policies to reduce Unemployment |
|---|---|
| 1. Cyclical | Expansionary Fiscal Policy & Expansionary Monetary Policy |
| 2. Frictional | Improve job information to decrease job search time. This can be fostered through employment agencies which may help job seekers to obtain jobs which they desire. |
| 3. Structural | Retraining Programs & Wage Subsidies |
| 4. Technological | Retraining Programs |
| 5. Seasonal | Government Employment Programs & Retaining Programs |
Read Next
Causes/Types of Unemployment
Go to Content →Intro to Unemployment
Go to Content →Uses, Benefits and Limitations of Measuring National Income
Go to Content →Methods of Measuring National Income
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