Q22 of 25 Page 4

Distinguish between voluntary unemployment and involuntary unemployment. What is the significance of this distribution?

● Voluntary employment is the situation when a worker who is able to work is unemployed due to his own unwillingness.


● A person remains unemployment despite jobs being available.


● Involuntary unemployment is a situation where a person who is able and willing to work is unable to get any work at the existing wage rate.


● The person is unemployed due to market conditions.


● The unemployment level in an economy is reflected by the degree of unemployment.


● According to Keynes, it is due to the insufficiency of effective demand which can be solved by increasing the aggregate demand by government intervention.


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