# data[].attributes.body
central bank increases money supply, causing interest rates to decrease. this causes consumers to be less willing to save and firms more willing to invest due to the low interest rates. this increases both the C and I components of AD, causing the demand for labour to increase and DD deficient unemployment to decresse.

# data[].attributes.body
exchange rate policy can solve demand deficient unemployment. Demand deficient unemployment is due to the decrease in AD, hence a lack of demand for labour.

An economy can depreciate their currency -> price of exports (X) decreases, price of imports (m) increases -> Qd(x) increases, Qd(m) decreases -> attaining the net export profit, (x-m) increases -> AD increases

An increase in AD causes it to shift rightwards on the AD-AS graph. Derived demand for labour increases and demand deficient unemployment decreases.

# data[].attributes.body
- depreciate currency - increase net exports (X-M)
- price of exports in terms of foreign currency falls - demand for exports to increase
- price of imports in domestic currency increases - quantity demanded of imports to decrease
- increase in net exports (X-M). Hence, AD will increase which will lead to an increase in real national income via the multiplier effect
- initial increase in AD due to the increase in (X-M) will lead to a rise in output and NY - rise in output leads to a further rise in factor incomes as more factors of production are employed. This will cause households to increase their consumption. This subsequent rise in induced C will lead to a further rise in AD and hence national income which leads to further rounds of increases in induced consumption - more than proportionate rise in NY via the multiplier effect - process stops when the initial increase in AD (injections) equals the total increase in savings, taxes and spending on imports (withdrawals).
- decrease in demand-deficient unemployment as more workers are required to increase output, increasing the derived demand for labour.

# data[].attributes.body
When interest rate drop, cost of borrowing drop and firms will find it more profitable to invest as level of returns of investment increase. C, I in AD will increase via the multiplier effect and real national income rise. Level of output increase closer to full employment of output. There is more derived demand for labour from the goods and services they produce hence reducing cyclical unemployment

# data[].attributes.body
Increase govt expenditure (G) and/or decrease direct taxes => increase AD

Govt can reduce personal & corporate tax.
Reduce personal Y tax => disposable Y increase => encourage consumption (C)
Reduce corporate tax => firm after tax profit increase => encourage investment (I)
~ increase C & I = increase AD

Govt can increase govt expenditure (G) on projects = increase AD

Increase AD = Unplanned reduction in stocks in the current period, firms will increase production in the next period to replenish their inventory stocks. Increased production = firms have to employ more FOP including labour. Derived demand for labour increases, reducing demand-deficient unemployment in the economy

# data[].attributes.body
Decrease IR decrease cost of borrowing. This cause households to be more willing to increase consumption of big ticket items -> C component increase. Firms also willing to invest more -> I component increase.

since C and I are components of AD, AD increases via the multiplier effect. Demand for labour increases solving DD deficient unemployment

# data[].attributes.body
-depreciate it’s currency
-price of exports in terms of foreign currency falls
-DD for exports increase
-quantity demanded for imports decrease
-increase in net exports (X-M)
-AD increase
-RNY increase via multiplier effect
-decrease DD-deficient unemployment as more workers are required to increase output
-increase derived demand for labour

# data[].attributes.body
expansionary fiscal policy adopted by singapore government can help to tackle demand-deficient unemployment as it increase aggregate demand. expansionary FP involves decreasing of personal income tax rate which increases consumers’ disposable income and purchasing power, as a result they are able to consume more goods and services, increasing C component of AD. it also increases firms’ after-tax profits, increasing investment I which is a component of AD. the decreasing of tax rates is particularly effective in singapore due to singapore’s frugal culture of being conscious of their spending. government increase expenditure got the SINGAPORE resilience package for covid 19 of 11 billion SGD i mb 2031, G increase as well，G is a component of ad. the resilience package can also further increase consumption and support those who are unemployed as unemployment is high. assuming keynesian range when AD increase  inventories fall. firms increase production hire more FOPs pay more factor payments. real national output from y1 to Y2 unemployment falls from y1yf to y2yf.

# data[].attributes.body
EMP centred on exchnage rate.
- through EMP, purpose is to depreciate currencies so that (x-m) component of AD will increase
- cuz when domestic currency depreciates, it’s cheaper to export out goods because price of exports in terms foreign currencies is lower, more export competitive and hence demand for exports will increase
- price of imports in terms of local currency will be more ex , hence , demand for imports will decrease
-> overall (x-m) component increases causing AD to increase and RNY / real output to increase via multiplier effect
-> unexpected reduction in inventories, firms will want to produce more next time period and hence employ more fop including demand derived labour
-> reduce demand-deficient unemployment.

however, limitations
- effectiveness based on Marshall Lerner condition , the summation of PED values of exports and imports

# data[].attributes.body
-bank can increase in money supply to reduce interest rate
-when interest rate falls, this can lead to an increase in the C component of AD especially on big ticket items as consumers may find it less attracted to save with a decrease in
interest rate.
-as the cost of borrowing is now lower, firms will also be more incentivise to borrow to finance their business/ invest more as the expected returns will be higher.
-Thus with an increase in the C and I component, AD increase. To increase output, the derived demand of labour would also increase hence reducing dd-deficient unemployment.

# data[].attributes.body
depreciate SGD
local exports become cheaper in terms of foreign currency
local exports become more competitive
(X-M) increase, AD increase via multiplier effect.
more workers are employed to increase output, increasing the derived demand for labour

# data[].attributes.body
Expansionary Fiscal Policy tackle the problem of demand deficient unemployment.
An increase in G leads to an increase in AD, which is reflected by a rightward shift from AD0 to AD1.
The economy produces higher output to cater to a rise in aggregate demand, production increases from Y0 to Y1 as labour is a derived demand, firms require more manpower as factors of production, bringing closer to full employment level Yf, reducing demand deficient unt.

# data[].attributes.body
With exp MP centered on IR, the central bank can increase money supply to reduce interest rate so as to increase AD in the economy.

consumers:
money supply increase -> IR fall -> consumers find it less attractive to save (returns of savings fall) -> increase consumption (cost of borrowing lower)

firms:
money supply increase -> IR fall -> firms more incentivised to borrow (cost of borrowing lower, expected returns higher)
-> increase investments

Overall, C and I increase, AD increase, derived demand of labour increase hence demand deficient unempt decrease.

# data[].attributes.body
Government increase government expenditure and reduce (corporate and income) tax rates. G is a part of AD, this an increase of G would result in an increase in AD. Thus, a rightward shift in AD. Hence,  production increases from Y1 to Y2, and labour is a derived demand, firms would need to hire more labour to meet the growing demand for goods and services. Hence, this is done by hiring more labour, bringing the economy closer to full employment at Yf. Thus, this reduces demand-deficient unemployment.

Reducing tax rates also entice firms to invest in the economy as tax rates are lowered, meaning after-tax profits would be higher. Thus, Investments increase. Consumers in households also would consume more as personal taxes are reduced and there is more purchasing power, hence consumption increases. AD thus increases. This increase in AD results in an unplanned reduction in stocks in the current period. Firms will increase production in the next period to replenish their inventory stocks and increase their production. More labour is therefore required to meet the higher production levels which is done by hiring labour. Since, theres is an increase in derived demand for labour, . Expansionary FP works out and helps solve demand-deficient unemployment from Y1Yf to Y2YF.

# data[].attributes.body
- decrease taxes
when taxes decrease, household’s disposable income and firms after tax profits will increase, causing the consumer expenditure to increase and firms being more willing to invest. since C and I are components of AD, aggregate demand increases. This causes there to be a fall in current inventories, resulting in firms having to employ more labour to produce and replenish inventories. The demand for labour hence increases, causing demand-deficient unemployment to decrease.
- government expenditure increases
as governments increase their expenditure through building new infrastructure and healthcare services, this causes AD to increase. this results in more jobs being created where labour is required to build the infrastructure. since the demand for labour is increased, this reduces demand-deficient unemployment.

# data[].attributes.body
direct mtd —> increase G by directly spending on gds and svcs —> AD increases —> derived demand for labour increase —>  DD deficient Un decreases
indirect mtd —> decrease taxes (personal tax rate and corporate tax rate) —> increase disposable income (HH) and after tax profits (firms) —> increase C and I —> AD increases —> derived demand for labour increase —>  DD deficient Un decreases

# data[].attributes.body
expansionary fiscal policy can solve demand deficient unemployment
Expansionary FP aims to increase AD by directly spending on goods and services by raising Government expenditure (G) such as on constructing transport and infrastructure.
By reducing tax rates, households  have higher disposable income and thus increase in Consumption expenditure (C). Firms will enjoy greater after-tax profits, incentivising them to increase their Investment expenditure (I).
As C, I, G are factors of AD, AD will rise, leading to increase in real GDP. There will be increase in derived DD for labour and thus reduce Demand deficient Unemployment.
As seen in the graph above, there is a multiplied increase in RGDP due to increase in AD by the multiplier effect. An initial rise in AD will lead to fall in unplanned inventories of firms. Firms will then increase production and output by hiring more workers. Workers earn higher income and spend more thus increasing consumption and further inducing consumption as there is further unplanned fall in inventories. Thus RGDP will fall leading to increase in derived DD for labour, and thus fall in Derived deficient unemployment