Keynesian Economics Reveals How Unemployment Can Persist Despite Falling Wages
Unemployment happens when there are more people looking for work than there are jobs available. Some economic theories say unemployment will go away if wages drop, but that's not always true. Another theory by Keynes says that how much people spend affects how many jobs are available. If people spend less, companies hire fewer workers, leading to a cycle of low employment and low spending. To fix this, governments can use policies like spending more money or changing interest rates to help the economy recover from a recession.