ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Capital intensive type of production technique increases unemployment. Capital intensive techniques are usually adopted to increase production efficiency and profits of a company. When capital intensive techniques of production are adopted then the work of labour gets decreased. Thus it leads to unemployment.

Detailed explanation-2: -The unemployment rate is measured by dividing the number of unemployed people by labour force (labour force = employed + unemployed but looking for a job). In general, high unemployment rates often produce negative outcomes for the economy.

Detailed explanation-3: -Proposed by economist Arthur Okun in 1962, it basically states that if GDP grows rapidly the unemployment rate declines, if growth is very low or neg-ative the unemployment rate rises, and if growth equals potential the unemploy-ment rate remains unchanged.

Detailed explanation-4: -Low consumer demand creates cyclical unemployment. Companies lose too much profit when demand falls. If they don’t expect sales to pick up anytime soon, they must lay off workers. The higher unemployment causes consumer demand to drop even more, which is why it’s cyclical.