Full employment in the economy and finance

Hello friends, followers of my blog, back with more content in the world of economics, for this occasion I bring you "Full employment", having knowledge about economic models and economic policies to regulate an economy for their social welfare, is where the importance of economic theory enters either at the microeconomic level or at the macroeconomic level, for our case today is at the macroeconomic level. The analysis of the study starts from the following, it assumes free competition, where it is assumed in the product market, but unlike all of them, it also assumes an imperfect labor market, in which wages are negotiated in nominal and not real terms.

The fascinating reader friend that the general theory of full employment, tries to show us within a society its citizens are willing to work actively, because at a level of real wages, the demand for labor is equal to the supply. This theory is well recognized by some of the great macroeconomists, John Maynard Keynes, as I mentioned in the field of macroeconomics. It is about achieving a balance between what we produce and what can be met to meet the needs of a society, where in this case full employment was a necessary condition for a real economic balance.

What impact does full employment have, the demand for labor is equal to the supply so that the labor market is in perfect balance, thanks to this is represented in an economic way by all workers who belong to the workforce and looking for work find it, but we must be realistic that the economic reality is another that is subject to the labor supply offered, practice the labor market has many imperfections, which leaves us much to think about.

At the level of finance focused on investment by the state, it should intervene in times of crisis by making public investments that generate employment and that can project a frontier of production and employment possibilities, to stimulate the gross domestic production of a nation.

All of this also teaches us that the entire economy, even if it has national savings, has its own levels of inflation, since not everything is produced in a nation and not everything works actively, so low levels of unemployment are considered, which is why it is necessary to seek a balance. Market equilibrium does not guarantee employment, nor consumption, nor investment, but it is recognized that full employment can only be achieved at the cost of increasing inflation, since inflation provides a means of lowering real wages, without lowering nominal wages.