Devi ahilya vishwa viDyalaya

viDyalaya,, inDore
(2023-24)

MacroeconoMics assignMent
topic- iMpact of MacronoMics variable on econoMic DevelopMent

prograM naMe- [Link] (hons.)

DepartMent- internation institute of professional stuDies

subMitteD to- Dr. sujata parwani MaM

subMitteD by- roshni chouhan | gariMa Marko

(ib
ib-2k22-51) (ib-2k22-18
18)
 MacroeconoMics

Macroeconomics is a branch of economics that deals with the performance, structure,

behavior, and decision-making of an economy as a whole. This includes regional, national,
and global economies. Macroeconomists study topics such as output/GDP (Gross Domestic
Product) and national income, unemployment (including unemployment rates), price
indices and inflation, consumption, saving, investment, energy, international trade,
and international finance.

Macroeconomics is traditionally divided into topics along different time frames: the
analysis of short-term fluctuations over the business cycle, the determination of structural
levels of variables like inflation and unemployment in the medium (i.e. unaffected by short-
term deviations) term, and the study of long-term economic growth. It also studies the
consequences of policies targeted at mitigating fluctuations like fiscal or monetary policy,
using taxation and government expenditure or interest rates, respectively, and of policies
that can affect living standards in the long term, e.g. by affecting growth rates.

Macroeconomics as a separate field of research and study is generally recognized to start

in 1936, when John Maynard Keynes published his The General Theory of Employment,
Interest and Money, but its intellectual predecessors are much older. Since World War II,
various macroeconomic schools of thought like Keynesians, monetarists, new
classical and new Keynesian economists have made contributions to the development of
the macroeconomic research mainstream.

MacroeconoMics objectives
This field of study is concerned with policies that impact the economy as a whole. As you
can imagine, this makes it a rather broad field.

 Balance of Payments

 Low unemployment

 Sustainable economic Growth

 Price Stability
 variables of MacroeconoMics
 GDP growth

It the standard measure of the value added created through the production of

goods and services in a country during certain period.

 Money supply

The total amount of money(currency+deposit money) present in an economy at a

particular point in time. The standard measures to define money usually include

currency in circulation and demand deposits.

 Unemployment

A condition in which skilled and abled individuals do not get gainful jobs at a decent

wage.

 Inflation rate

The rate of increase in prices over a given period of time. Inflation is typically a

broad measure, such as the overall increase in prices or the increase in the cost

of living in a country.

 Government debt

The financial liabilities of the government sector.

 Stock market volatility

a reflection of the degree to which price moves. A stock with a price that
fluctuates wildly—hits new highs and lows or moves erratically—is considered
highly volatile. A stock that maintains a relatively stable price has low volatility.

Here we will take UNEMPLOYMENT in our survey.

 uneMployMent
Unemployment is a situation where people above a specified age (usually 15) not being in
paid employment or self-employment but currently available for work during the reference
period.

Unemployment is measured by the unemployment rate, which is the number of people who
are unemployed as a percentage of the labour force (the total number of people employed
added to those unemployed).

Unemployment can have many sources, such as the following:

 New technologies and inventions

 The status of the economy, which can be influenced by a recession
 Competition caused by globalization and international trade
 Policies of the government
 Regulation and market

types of uneMployMent
real wage uneMployMent:-
Real wage unemployment is a situation in which wages are set above the equilibrium
level, resulting in an excess supply of labor or unemployment. It occurs when the
minimum wage or other forms of wage regulation, such as collective bargaining
agreements, cause wages to be higher than what would be determined by the market
forces of supply and demand.

It can also be caused by factors such as technological change or changes in the

structure of the economy. For example, if a new technology reduces the demand for a
particular type of labor, such as manufacturing jobs, workers may face unemployment
as they try to find new jobs in other sectors of the economy.

cyclical uneMployMent
Cyclical, deficient-demand, or Keynesian unemployment occurs when there is not
enough aggregate demand in the economy to provide jobs for everyone who wants to
work. Demand for most goods and services falls, less production is needed and
consequently, fewer workers are needed, wages are sticky and do not fall to meet the
equilibrium level, and unemployment results.
structural uneMployMent
Structural unemployment occurs when a labour market is unable to provide jobs for
everyone who wants one because there is a mismatch between the skills of the
unemployed workers and the skills needed for the available jobs. Structural unemployment
is hard to separate empirically from frictional unemployment except that it lasts longer. As
with frictional unemployment, simple demand-side stimulus will not work to abolish this
type of unemployment easily.

Structural unemployment may also be encouraged to rise by persistent cyclical

unemployment: if an economy suffers from longlasting low aggregate demand, it means
that many of the unemployed become disheartened, and their skills (including job-
searching skills) become "rusty" and obsolete. Problems with debt may lead
to homelessness and a fall into the vicious circle of poverty, which means that people
affected in this way may not fit the job vacancies that are created when the economy
recovers. The implication is that sustained high demand may lower structural
unemployment.

frictional uneMployMent
Frictional unemployment is the time period between jobs in which a worker searches for or
transitions from one job to another. It is sometimes called search unemployment and can
be voluntary, based on the circumstances of the unemployed individual. Frictional
unemployment exists because both jobs and workers are heterogeneous, and a mismatch
can result between the characteristics of supply and demand. Such a mismatch can be
related to skills, payment, work-time, location, seasonal industries, attitude, taste, and a
multitude of other factors. New entrants (such as graduating students) and re-entrants
(such as former homemakers) can also suffer a spell of frictional unemployment.

The frictions in the labour market are sometimes illustrated graphically with a Beveridge
curve, a downward-sloping, convex curve that shows a correlation between the
unemployment rate on one axis and the vacancy rate on the other. Changes in the supply
of or demand for labour cause movements along the curve. An increase or decrease in
labour market frictions will shift the curve outwards or inwards.

long-terM uneMployMent
Long-term unemployment (LTU) is defined in European Union statistics as unemployment
lasting for longer than one year (while unemployment lasting over two years is defined
as very long-term unemployment). The United States Bureau of Labor Statistics (BLS),
which reports current long-term unemployment rate at 1.9 percent, defines this as
unemployment lasting 27 weeks or longer. Long-term unemployment is a component
of structural unemployment, which results in long-term unemployment existing in every
social group, industry, occupation, and all levels of education.
 causes of uneMployMent

The major causes of unemployment in India are as mentioned below:

*Large population.

*Lack of vocational skills or low educational levels of the working population.

*Labour-intensive sectors suffering from the slowdown in private investment particularly

after demonetisation

The low productivity in the agriculture sector plus the lack of alternative opportunities for
agricultural workers that makes transition among the three sectors difficult.

iMpact of uneMployMent

The unemployment in any nation have the following effects on the economy:

*The problem of unemployment gives rise to the problem of poverty.

*The government suffers extra borrowing burden because unemployment causes a

decrease in the production and less consumption of goods and services by the people.

*Unemployed persons can easily be enticed by antisocial elements. This makes them lose
faith in the democratic values of the country.

*People unemployed for a long time may indulge in illegal and wrong activities for earning
money which increases crime in the country.
graphical representation of uneMployMent last 5 years

 India unemployment rate for 2022 was 7.33%, a 0.38% decline from 2021.
 India unemployment rate for 2021 was 7.71%, a 2.48% decline from 2020.
 India unemployment rate for 2020 was 10.20%, a 3.69% increase from 2019.
 India unemployment rate for 2019 was 6.51%, a 1.14% decline from 2018.
 steps taken by governMent to control uneMployMent

[Link] Guarantee Scheme- It was first introduced by the

Government of Maharasthtra on 28 th March 1972. This scheme was intend to
provide productive employment to the rural population thereby solve the
problem of rural unemployment and poverty. Under this scheme, the
government assures to provide minimum employment opportunities. Due to its
success in Maharashtra, EGS was implemented in other states as well.

[Link] Gram Swarozgar Yojana(SGSY)- This scheme

was launched in April 1999 after restricting the Integrated Rural Development
Program and allied scheme. It is the only self employment scheme for the rural
poor in india.

[Link] Mantri Rozgaar Yojana(PMRY)- This scheme

implemented since 1993 it aims at creating and providing sustainable self
employment opportunities to more than 1 million educated unemployed youth.

[Link] Gandhi National Rural Employment Guarantee Scheme(MGNREGs)

Since 2nd October 2009, National Rural employment guarantee scheme has
been renamed as MAHATMA Gandhi National Rural Employment Guarantee
Scheme. This scheme provides atleast 100 hundred days of guaranteed wage
employment in a financial year to atleast one member of every rural household
whose adult member volunteers to do unskilled manual work.

5. Start-Up India Initiative- It was introduced in January 2016, with an

aspiration to impart more strength and insipiration to the talented young
generation of india to do something new for India and Humanity.
 conclusion
The unemployment rate in India inched higher to 7.45% in February 2023,
taking the total number of unemployed in the country to 33 million. India needs
to make dedicated efforts in order to decrease the number of unemployed
people.

By following a comprehensive approach including skilling of people, better

education, increased focus on labor-intensive sectors, etc. India will be able to
decrease the unemployment rate substantially.

Youthful workers in the labor force tend to experience more underemployment

as a result of switching jobs and moving into and out of the labor force. Many
public policies can also discourage the creation of employment, such as a high
minimum wage, high unemployment benefits, and a low opportunity cost
associated with terminating workers.

Employment is the primary source of income for a person and hence, it is the
source of economic growth. It is considered a lagging economic indicator. High
underemployment suggests a low GDP and low demand for labor.
THANK YOU!