Running head: DETERMINING CAUSE AND EFFECT 1 DETERMINING CAUSE AND EFFECT OF UNEMPLOYMENT 2 Determining Causes and Effects Name Institution Instructor Course title Determining Causes and Effects of Unemployment Introduction Unemployment comes about when an individual who is actively seeking employment is not able to obtain work (Marshalle, 2006). Unemployment is frequently used to gauge the health of an economy. The most regularly cited unemployment measure is the rate of unemployment. This is usually described as the number of unemployed individuals divided by the amount of individuals in the workforce. Many varied unemployment rate variations exist with different descriptions regarding who is an “unemployed individual” and who is within the “workforce.” For instance, the United States BLS (Bureau of Labor Statistics) frequently quotes the "U-3" rate of unemployment as the official rate of unemployment, but this description of unemployment doesn’t incorporate unemployed people who have become disheartened by a daunting labor market and have abandoned hope to find work (Malinvaud & Caffè, 2004). The different economic schools thought vary on their elucidation of the unemployment cause. Keynesian economics suggests that there exists a natural unemployment rate for the reason that the laborers skills and the openings available are somewhat beyond sync even in the best economic environments. Neoclassical economics proposes that the work market is effective if left alone (Stone, 2009). With that said, the goal of this paper is to discuss the various causes of unemployment, their effects on the economy and their effects on people. Unemployment Causes The exact unemployment cause will always be debated because there are many predictions, explanations, and theories set forth by economists. Considering the Keynesian theory, it asserts that, unemployment upshots from a growth in demand rates, whereas the economy works below its potential output and growth rate (Nicholas, 2006). Hereafter, the economy encounters a huge blow under the following circumstance. Often unemployment is brought about by various economic issues. For instance, the recession was among the major unemployment causes in the U.S.in 2007. It developed into a global crisis in which the unemployment rate knew no limits. A grave financial crisis hit virtually all countries all through the world. Increase in unemployment became a regular issue. People stayed unemployed while waiting for the economies redeemed stability (Marshalle, 2006). Another economic issue is inflation. It is one of the long-standing causes of unemployment. An economy of a state faces a sharp rise in prices of commodities as matched to other world’s economies. This brings about the breakdown in exports, as businesses are unable to contend with others because of a rise in price. Returns suffer, people's inves.