Value Of Canadian Dollar And Interest Rates example essay topic

Unemployment is one of the major economics problems. People who are considered unemployed are those who are seeking work or laid off for more then a week. There are many different reasons why a person could be unemployed. Three of those causes are cyclical, structural and seasonal unemployment. The government tries to find solutions in order to reduce unemployment by making up policies. Cyclical unemployment is one of the causes that creates unemployment.

When a person is cyclically unemployed, it means that the income is limited to the economic state and there are more jobs when economy is well however when it's not the number of jobs available decrease. Also when people have less spending money it creates many cutbacks and loss of jobs. Therefore, this form of unemployment is usually temporary. When there is an economic growth, cyclical unemployment reduces.

Structural unemployment is another cause that creates unemployment. As time goes on, consumer's demand changes, which causes a growth in one industry, a decrease in another or it may lead to a complete shut down of a industry. And even though jobs will increase in growing industry, they will decrease or disappear in another for example, Atlantic Canada where demand for ship building was no longer needed. Thus structural unemployment causes regional unemployment because certain areas are unable to attract new industries when their old ones are shut down. Seasonal unemployment mostly depends on the climate and therefore varies in the regions of Canada. In the winter time industries like fishing, construction, and tourism struggle in certain regions.

However, demand in some industries like snow cleaning will increase. The other examples where people could be seasonally unemployed are farming, lumbering and etc. People who work in those industries are usually employed for 6 month and unemployed for the other six when there industry is off season. I order to reduce cyclical and structural unemployment, the government may lower the value of canadian dollar. Which will make american dollar more valuable and will let it buy more in short and long term. This will cause increase in canada in production because demand will increase and companies will have to produce more in order to satisfy the consumers.

This policy will increase the price of americans products because canadian dollar now worth less. It also may decrease tourism outside of the country but increase the number of tourists coming to canada. Thus lowering the value of canadian dollar will decrease unemployment in long and short term. Similarly, lowering interest rates will reduce unemployment. This monetary policy is going to help to reduce cyclical unemployment because with low interest rates, more companies will want to expand and won t have to pay as much for it. Thus, expansion and creation of new businesses will create more jobs.

Also the consumer will be able to borrow more money and that will create more spendings and increase demand for products in the short term. However, those extra spendings may cause an inflation in the long term. Despite that, lowering interest rates, will reduce unemployment. Lowering value of canadian dollar and interest rates will benefit the deficit. Both policies create more jobs and now government has to pay less social assistance such as welfare. Less social assistance payments will allow to the government to save more money and deficit will decrease.

Also borrowing money from the government will decrease the deficit. Smaller businesses will also benefit from those policies. Lowering the value of canadian dollar will increase the demand for canadian product. Therefore, companies will have to expand in order to produce the needed demand. The production of smaller businesses will cause an increase in sales.

As it had been stated above low interest rates will benefit smaller businesses because borrowing money is cheap. More business will expand and open due to low interest rates. And this will increase public spendings. More public spending will cause inflation in the long term, which will cause a decrease in sales. Therefore, lowering interest rates only benefits smaller businesses in the short term. In conclusion, unemployment is one of the greatest economic concerns not only in canada but in the world.

And it's caused by many factors 3 of which are cyclical, structural and seasonal unemployment. And it could be reduced by an economic growth, lowering the value of canadian dollar and decreasing interest rates. However, there will never be any economy where 100% of the population are employed the full employment is considered when only 95-98% of the population are working.