Understanding Causes and Effects of Unemployment

Many of us today, upon losing a job through not of our own doing but brought about by economic conditions of a nation as a whole, do not completely understand how these things can happen when we believe that the company we are working for has been is stable and effective grounds. Most of us just wanted to get back to work right away. When we do actively seek for jobs but keep denied, we always think that it is our entire fault. Before any of us jump into similar conclusions, it is important for us as ordinary but important citizens to get a clear glimpse on why certain situations are just bound to happen and our job is affected. A clear understanding on economics and how unemployment has a direct relation to the national economy, here are major terms and philosophies that you must understand. Do not be discouraged by the news you see on a daily basis regarding how bad the economy has become.

1. Unemployment. Sometimes, unemployment becomes a result of some government or business policies which may be mismanaged. A good example of this is the losses incurred by the real estate industry due to unnecessary financing concepts. When recessions first occurred in 2001, it was observed that the real estate and banking industries first suffered the blow due to low returns of loans. Many layoffs occurred and bankruptcies filed. As banking institutions lost and their lending power weakened, so did investments which could have generated more jobs.

2. Recessions. This term has been heard million times and still too many do not understand it. It is an economic condition in which a nation suffers from two or more consecutive quarters of dwindling gross domestic product. A clear understanding of this terminology allows you to understand how it affects the stock market, unemployment rate, and investments from different business sectors.

3. National Economy. A country’s overall condition in the economy depends on the interrelationships between a country’s status of employment, production of goods and services (supply), and consumption of same goods and services (demand), and prices. These interrelationships will then help measure a country’s national economic output, more known as the GDP or gross domestic product.