Referat Bajardi: Safarova Parizod mm53 I tekshirdi: Allayarov. Sh theme: Unemployment and its types
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- : The concept of aggregate demand and its composition.
- The financial system and its components.
- Economic growth
Bajardi: Safarova Parizod MM53 I
Tekshirdi: Allayarov. SH
Theme: Unemployment and its types
Unemployment is a hot button issue across many of the world`s economies, and many governments use unemployment rates to determine everything from economic stability to citizen satisfaction.
There are four main types of unemployment in an economy
Seasonal and each has a different cause.
Frictional unemployment is caused by temporary transitions in worker`s lives, such as when a worker moves to a new job. Frictional unemployment also includes people just entering the labor force, such as freshly graduated college students. It is the most common cause of unemployment, and it is always in effect in an economy. Structural unemployment is caused by mismatch in the types of jobs workers and the types of jobs available, either when there are jobs available that worker`s don`t have the skills for, or when there are workers available but no jobs to fill. Structural unemployment is most obvious in industries undergoing technological advancements. For example, in the farming industry, much of the work is becoming mechanized, which means that fewer farmers are needed and many are let go. When these farmers go to cities to find work, they may find no other similar jobs in which to apply their skills. Cyclical unemployment is caused by declining demand: when there is not enough demand in an economy for goods and services, businesses cannot offer jobs. According to Keynesian economics, cyclical unemployment is a natural result of the business cycle in times of recession: if all consumers become fearful at once, consumers will attempt to increase their savings at the same time, which means there will be a decrease in spending, and businesses will not be able to employ all employable workers. Seasonal unemployment is caused by different industries or parts of the labor market being available during different seasons. For instance, unemployment goes up in the winter months, because many agricultural jobs end once crops are harvested in the fall, and those workers are left to find new jobs.
Unemployment in the current situation is a reality that has arisen as a result of stages of development in the process of forming market relations. Attitudes towards unemployment as a socio-economic criterion of the state of society have changed over time, but the damage caused by unemployment is causing the country to lag significantly behind in economic development. An increase or decrease in economic activity is the main reason for the increase and decrease in employment and unemployment in the country. The periodic development of the economy and the successive rise and fall economic activity over a period of years or decades leads to certain fluctuations in the number of gangs and the unemployed. Economists do not share the same views on the causes of unemployment. The following main causes of unemployment can be distinguished:
Overpopulation (the world economy as a whole has a labor surplus, and a sharp increase in population contributes to this);
Establishment of wage rates above equilibrium under the pressure of trade union actions and socio-economic activity of the population;
The displacement of labor by capital during the scientific and technological revolution;
Existence of monopsony in the labor market (monopsony enterprises set wage conditions and reduce employment);
Low solvency demand (lack of demand for goods and services reduce the demand labor, because the demand for labor is productive, resulting in unemployment).
It is also possible to distinguish a number of cause of frictional unemployment: Geographical migration of a population: a person moves from one place to another in a new place and before and after the migration; Change of professional interests, re-training, re-qualification;
The arrival of new stages in a person`s personal life: leakage, childbirth and so on. The causes of structural unemployment are the result of technical advances that reduce the demand for workers in one profession and increase the demand for workers in another profession. In other words, structural unemployment is caused by the loss of employment opportunities due to differences in the compositions of supply and demand for different professions. The reasons for latent unemployment in enterprises can be divided into two groups: the reasons for the inability of company executives to dismiss employees en masse, and the reasons why employees do not resign even when the living wage is three times the subsistence level.
The first group of reasons for keeping hidden unemployment includes the following. First, even in the face of a decline in production, firm executives seek to retain employees for the future by including partial employment. Paid (and unpaid) vacations. Second, it provides an opportunity to count on financial support from the state in retaining employees. Third, firms often do not have the finds to pay benefits and wages to employees who are laid off during the period of employment under labor law. Therefore, dismissals are usually carried out under the guise of “less will” due to deteriorating working conditions and low wages. The second group of reasons for hidden unemployment is explained by the fact that employees do not leave their old jobs, even at very low wages. First, there will be no other opportunity to find work in sparsely populated areas. Second, continuous work experience is essential for the able-bodied adult population to receive benefits. Third, unemployment benefits do not cover job losses, even if they are obtained. Fourth factors such as the stability of employment often take root in the minds of workers. Many people, even if they earn money working in the shadow economy, as well as in private farming, do not lose touch with their main place of work, preferring part-time employment.
In the first quarter of 2019, the unemployment rate in Uzbekistan was equal to 9.4%. This was reported by the Ministry of Employment and Labor Relations.Reportedly, this indicator is 0.1% more than in January-December 2018 (9.3%), but it is 0.3% lower than in January-March 2018.The highest unemployment rate was registered in the Republic of Karakalpakstan, Andijan, Kashkadarya, Samarkand, Sirdarya and Fergana regions at 9.7%, the lowest – in the city of Tashkent (8.0%). The number of people in need of employment was 1391.1 thousand people. Unemployment rate among youth under the age of 30 was 15.3%. The number of socially active population reached 14,767.1 thousand people (1%higher than in January-March 2018). At the same time, the share of the formal social sector is 5,412.1 thousand people. This indicator has in the number of those employed in the social sphere (92,200), as well as the increase in the number of entrepreneurs without a patentable legal entity (76,900).
Employment in the informal sector remained the same with last year – 7,963.9 thousand people. At the same time, the number of temporary and seasonal works increased by 41,900, while those entrepreneurship without a special permit decreased slightly (by 3,600). The number of socially non-active population was 4,186.8 thousand people (increased by 1%).
The result of the survey show that the number of workers who went abroad (19,400) has decreased significantly by 2365.4 thousand people. In January-March 2019, 173,265 people (61,880 of whom were aged 16-30) appealed to labor organizations. 61,983 of the total number of applicants were employed, 49,016 were involved in public works, 6,977 were directed to vocational training, 3,863 were granted unemployment benefits.
Theme: The concept of aggregate demand and its composition.
To examine the relationship between changes in national output in macroeconomics and changes in overall prices, why aggregate demand (AD-AS aggregate demand aggregate) to explain why national output grows steadily in some periods and declines in others supply) model.
This model uses aggregate indicators such as aggregate demand, general price level. AS model is the main model for organizing fluctuations in production volumes and price levels, as well as the consequences of their changes, and several other models are a special case of the AD-AS model. Using the AD-AS model, various options of public economic policy can be described. Aggregate demand is the of households, enterprises, government and foreign buyers for the total volume of final goods and services produced in the economy at a certain level of prices.
In other words, the total demand is the sum of the total costs incurred in purchasing the final goods and services produced in the economy. In the form of a formula, the general requirement can be described as follows:
The line representing the relationship between the price level and the volume of national product demanded is called the total demand curve.
The trajectory of the AD-curve in the national market can be explained primarily using the equations of the quantitative theory of money.
Where: M is the amount of money in circulation;
V is the velocity of money;
R is the price level in the economy;
Y is the actual production volume required.
From this equation P=; We derive the equations Y=. It can be seen from these equations that the higher the price level, the lower the demand for real national product, in if the money supply and its velocity do not change, there is an inverse relationship between the price level and aggregate demand. This dependence is also explained by the following price factors:
Interest rate effect;
The effect of wealth or the effect of real cash balances;
Impact of import purchases.
The interest rate effect, or Keynesian effect, means that the shift in aggregate demand along the depends on the effect on the interest rate. This means that if the price levels of goods increase, consumers will need large amounts of cash to make purchases. Businesses will also need large sums of money to pay salaries and other expenses. In short, high commodity price levels increase the demand for money. If the volume of money supply does not change, an increase in demand will lead to an increase in interest rates. In the context of high interest rates, the demand of entrepreneurs for investment goods decrease.
The effect of import purchases means that when the domestic price of goods and services in a country increases relative to foreign prices, the demand for goods and services produced in that country decreases, and in turn the demand for imported goods in that country increases. And, conversely, a decrease in domestic prices leads to decrease in imports and an increase in exports, or an increase in demand for a national product. This affects the total demand volume through the net export volume.
Equilibrium is the price-quantity pair where the quantity demanded is equal to the quantity supplied. It is represented on the AS-AD model where the demand and supply curves intersect. In the long-run, increases in aggregate demand cause the price of a good or service to
increase. When the demand increases the aggregate demand curve shifts to the right. In the long-run, the aggregate supply is affected only by capital, labor, and technology. Examples of events that would increase aggregate supply include an increase in population, increased physical capital stock, and technological progress. The aggregate supply determines the extent to which the aggregate demand increases the output and prices of good orb services. When the aggregate supply and aggregate demand shift, so does the point of equilibrium. The aggregate demand curve shifts and the equilibrium point moves horizontally along the aggregate supply curve until it reaches the new aggregate demand point.
If the aggregate demand curve changes in the vertical section of the AS curve it does not affect the production volume and only the price level changes. That is, an increase in demand in this section leads to demand inflation. Any change in demand in this cross section of aggregate supply will only lead to a change in the price level. Production volumes remain unchanged at full employment.
Theme: The financial system and its components.
When we talk about the financial system, we mean a network of financial institutions, financial markets, financial instruments and financial services to facilitate money transfers. The system consists of savers, intermediaries, instruments and the ultimate user of funds. The level of economic growth largely depends upon and is facilitated by the state of financial system prevailing in the economy. Efficient financial system and sustainable economic growth are corollary. The financial system mobilizes the savings and channelizes the savings and thus influences the pace of economic development. Economic growth is hampered for want of effective financial system. Broadly speaking, financial system deals with three inter-related and interdependent variables, money, credit and finance. The financial system provides channels to transfer funds from individual and groups who have saved money to individuals and group who want to borrow money. Saver are suppliers of funds to borrowers in return with promises of repayment of even more funds in the future. Borrowers are demanders of funds for consumer durables, house, or business plant and equipment, promising to repay borrower funds based on their expectation of having higher incomes in the future. These promises are financial liabilities for the borrower-that is, both a source of funds and a claim against the borrower`s future income. Borrowers, lenders, and investors exchange current funds to finance projects, either for consumption or productive investments, and to pursue a return on their financial assets. The financial system also includes sets of rules and practices that borrowers and lenders use to decide which projects get financed, who finances projects, and terms of financial deals.
Financial systems are of crucial significance to capital formation. The adequate capital formation is indispensable to a speedy economic development is universally recognized in academic literature. The main function of financial system is the collection of saving and them
distribution for industrial investment, thereby stimulating the capital formation and, to that extent, accelerating the process of economic growth. The process of capital formation involves three distinct, although inter-related activities:
Savings: The ability by which claims to resources are set aside and become available for other purposes.
Finance: The activity by which claims to resources are either assembled from those released by domestic savings, obtained from abroad, or specially created usually as bank deposits or notes and then placed in the hands of the investors.
Investments: The activity by which resources are actually committed to production. The volume of capital formation depends upon the intensity and efficiency with which these activities are carried on. The effective mobilization of savings, the efficiency of the financial organization system and the channelization of these savings into the most desirable and productive forms of investment are all inter-connected and have a great bearing on capital formation to economic development. Their relevance to the saving-investment process is derived from what is called the transfer process.
Transfer Process: The genesis of the financial system is traceable to the divorce between savings defined as the excess of current income over current expenditure, and investment representing expenditure on durable assets. The relationship between savings and investment varies considerably among economic units. Goldsmith has designated the various economic units into three categories: Saving-surplus units, that is, those units whose savings are in excess of investments, Saving-deficit units, that is those units whose investment exceeds savings, and Neutral units in whose case savings are equal to investment. If capital formation is to take place, the savings of the saving-surplus units must be transferred to the saving-deficit units. This is precisely what the financial systems do by acting as a link between the savers and the
investors, thereby facilitating the flow of saving into the industrial investment. They are important in the process of capital formation, because the act of investment is usually confined to a special class of businessmen who command the requisites technical and market information and temperament to use it, while the activity of saving is largely diffused between innumerable individuals who lack the skills, capacity and personal characteristics for active investment. Hence transferred process is crucial to facilitate the economic growth. Besides, there are geographical and technical limitations that inhibit the process of investment. This gap is filled by the financial systems which promote the process.
The financial system consists of links such as finance of business entities, finance of commercial enterprises and organizations, finance of financial intermediaries and finance of non-profit organizations. At the same time, the finance of commercial enterprises and organizations plays an important role, which is where the bulk of financial resources are formed. The general financial situation of the country is determined by the financial situation of these enterprises.
A financial market is a market in which people and entities can trade financial securities, commodities and other fungible assets at prices that are determined by pure supply and demand principles. Markets work by placing the two counterparts, buyers and sellers, at one place so they can find each other easily, thus facilitating the deal between them. Financial markets may be viewed as channels through which flow loanable funds directed from a supplier who has an excess of assets toward a demander who experiences a deficit of funds. There are different types of financial markets and their characterization depends on the properties of the financial claims being traded and the needs of the different market participants. We recognize several types of markets, which vary based on the type of the instrument traded and their maturity.
Theme: Economic growth
In economics, growth is commonly modeled as a function of physical capital, human capital, labor force, and technology. Simply put, increasing the quantity or quality of the working age population, the tools that they have to work with, and the recipes that they have available to combine labor, capital, and raw materials, will lead to increased economic output.
There are a few ways to generate economic growth. The first is an increase in the amount of physical capital goods in the economy. Adding capital to the economy tends to increase productivity of labor. Newer, better, and more tools mean that workers can produce more output per time period. For a simple example, a fisherman with a pointy stick. However, two things are critical to this process. Someone in the economy must first engage in some form of saving in order to free up the resources to create the new capital, and the new capital must be the right type, in the right place, at the right time for workers to actually use it productively.
A second method of producing economic growth is technological improvement. An example of this is the invention of gasoline fuel; prior to the discovery of the energy-generating power of gasoline, the economic value of petroleum was relatively low. The use of gasoline became a better and more productive method of transporting goods more efficiently. Improved technology allows workers to produce more output with the same stock of capital goods, by combining them in novel ways that are more productive. Like capital growth, the rate of technical growth is highly dependent on the rate of savings and investment, since savings and investment are necessary to engage in research and development.
Economic growth can be considered among the most crucial indicators that are released. The reason why it`s so important is that it indicates
the growth in economic output, whether measured by GDP (gross domestic product), GVA (gross value added), or any other measure.
The stage of development of an economy is crucial for comparing two economies. Developed economies have a much slower growth pace YoY (year-over-year) than emerging or developing economies. As a result, comparing the US and China`s economic growth rates won`t be accurate. Instead, comparing the economic growth of countries in the same stage of development preferably the same geographic region, provides a more comparable picture.
Economic growth is defined as the increase in gross domestic product (GDP) and its per capita value. If the is to assess the country`s economic potential, then GDP growth figures will be used. GDP per capita is used to assess the living standards of the population. In this case, the rate of change in GDP and the rate of change in population are taken into account. If the rate of change in GDP is higher than the rate of change in population will increase. If these figures are the same, the living standards of the population will not change. If the of change in GDP lags behind the rate of change in population, there will be a decline in living standards. Here are two factors that affect economic growth. They are: extensive and intensive factors.
Extensive factor is the economic growth achieved through the expansion of land in agriculture and the introduction of new capacities in industry, while maintaining the old form of production. For example, one hectare of tomatoes yields an average of 20 tons. In order to double the volume of tomato production in the extensive factor, tomatoes are planted on another hectare of land, and al agro-technical measures are carried out in the same way as on the previous one hectare, resulting in another 20 tons and a total yield of 40 tons. Or another plant with the same capacity will be built in addition to the existing one to double the production of bread. In extensive development, if it is done its purest form, the efficiency of production remains the same.
The intensive factor of economic growth is the expansion of production through the qualitative improvement of the means of production, in the use of advanced technologies, the training of workers, as well as the effective use of existing production capacity. This factor is reflected in the efficient use of internal resources of production, and quality of products without excessive effort and money. In order to double the volume of intensive tomato production, it is not necessary to plant on 2 hectares of land, but on the same 1 hectare of land to apply advanced agro-technical methods (drip irrigation, use of tillage techniques, new seeds and their application. The use of advanced methods of cultivation, etc.) is sufficient. Or a doubling of bread production can be achieved by replacing old equipment with modern ones, improving the skills of staff, and organizing the working day more efficiently. But it should also be noted that in real life, the extensive and intensive factors do not exist in a pure state, separately, but in a certain harmony, in a combined way. A growing or more productive economy makes more goods and provides more services than before. However, some goods and services are considered more valuable than a pair of socks. Growth has to be measured in the value of goods and services, not only the quantity.
Population growth The Solow model of economic growth can be modified in three ways. First, it gives us a closer understanding of economic growth. In a stable state, population growth will be constant per capita production and capital. It is necessary to ensure that the growth of the level of workers, but also the growth of total capital and total production. Although population growth does not explain the well-being of the population (because per capita production does not change), it does help to understand how to ensure growth b total output.
It is important to use the methods of economic growth correctly and sparingly. For example, when considering the problem of identifying and developing the country`s military potential, it is advisable to use
GDP per capita indicators when comparing the living standards of the country`s population. In practice, there are two types of economic growth: real and potential. Real economic growth is a real annual increase in GDP or other macroeconomic indicators published regularly by statistical agencies. Potential economic growth is the rate at which an economy can grow. Potential economic growth factors include: an increase in resources; increase efficiency
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