News Review Article Discussed: More unemployed youths? IBGS, WSJ, 15/04 this article discusses the effect of unemployment to the economic status of Brazil. This is important because Brazil is a middle income economy with several dynamism in economic growth and unemployment rate slightly higher that its counterparts. Unemployment is increasing steadily and economic conditions are worsening. The rate of unemployment has almost tripled in the recent year with a slight decrease in rate of unemployment. Since population is the main determinant of consumption, unemployment has led to slow rate of consumption thus slow rate of economic growth. Question: use the model of regression analyze to determine the relationship between economic development and rate of unemployment.
Be sure to highlight all the relevant drivers of unemployment and economic development. Answer Key: the graph below indicate the relationship of unemployment and economic development. As the rate of unemployment increase, the rate of slow economic development also increases. The key determinant of slow economic development is the level of GDP while the key determinant of unemployment is low consumption caused by low expenditure.
As the rate of unemployment increases, the rate of expenditure will reduce thus lowering consumption rate. This in turn lower the rate of GDP and thus slow economic growth. The graph below represent the above case. Graph of rate of unemployment and economic development