NORTHERN UNIVERSITY OF BUSINESS AND TECHNOLOGY

KHULNA, BANGLADESH

Course code: BBA 0206

Course Title: Macroeconomics

Topic:
1. Briefly discuss the causes behind unemployment.
2. Define BOP & BOT. Show the difference between
BOT & BOP.

SUBMITTED TO:

SADIA TASNEEM
Senior Lecturer in Economics
Department of Business Administration

SUBMITTED BY:

DIBBO SADHU
ID: 01190110407
Program: BBA
Sec: 5A

Date of Submission: Sep 19, 2020

Question 1: Briefly discuss the causes behind unemployment.

Answer: Unemployment is an economic condition where people effectively

looking jobs remain unemployed. In other words, it is those people who are avail
to work but does not have any work. It is measured by the rate which is dividing
the number of unemployed people by the total number of people in the labor force.
It is a great problem in all over the world. It has become a threat of global
economic wellbeing and social development. There are many reasons of
unemployment. The main causes of unemployment are: Increase in population,
advanced technology, lack of education and skills, rising cost, job outsourcing,
falling economic growth etc.

Increase in population: Increase in population is a great problem in developing or

under developing country. Like, Bangladesh is a large population country of 161.4
million people. The number people of our country is increasing day by day. And
the number of people who are looking for jobs is also increasing. It I difficult to
provide jobs for all this huge number of workers. The demand for work is rising
but the work place is limited. For this reason, the huge number of people who have
the capacity to work does not have any work. This will result in increased the
number of unemployed person.

Advanced technology: The new advanced technology is also cause

unemployment problem. Unemployment occurs when new technology cause some
workers lose their jobs. Nowadays many types of advanced machine and
technology are being added in the factories. Which made production faster and
more accurate. It also decrease production cost. Many jobs handled by hands are
being done by machines. Low skilled and unskilled people are replaced by
machines and technology. This result in more unemployed people.

Lack of education or skills: Unemployment is also caused by lack of education

or skills. There are a lot of uneducated people in our country. Uneducated people
are not sufficient to meet his job responsibilities. They have a huge lack of
knowledge. Another causes of unemployment is lack of skill. Uneducated person
have a major lack in skills. They don’t know how to operate a computer, how to
communicate others. They have huge lack in management. Without education
employment opportunities will be decreases and unemployment rate will be
increases.

Job Outsourcing: Unemployment can also be cause by job outsourcing.

Outsourcing is a business practice in which services or job functions are farmed
out to a third party. Company may choose to outsourcing initiative with another
country where labor cost is cheaper. Many company choose outsourcing to reduce
their production cost. Which increases unemployment of a country.

Rising cost: Another causes of unemployment is rising cost. Rising cost means
increase in companies expenditure. Because of raising cost sometimes company
could not pay the minimum wages to the employees. For this reason companies
lay off their employees so that they can reduce their cost, as a result many people
become jobless. Which increases unemployment rate.

Falling economic growth: Another reasons for unemployment is falling economic

growth. When the demand decreases the output, income, prices and profit also
decreases. Which reduces cash flow in the market and the economic growth slows
down. Companies are need to cut costs by reducing payroll expenses. Which
increases unemployment.

Question 2: Define BOP & BOT. Show the difference between BOT & BOP.

Answer: BOP (Balance of Payment): Balance of payment is the difference

between a nations total payments to foreign countries and its total receipts from
them. It is a systematic record of a country’s receipts and payments in
international economic transections in a specific period of time. It takes into
account exchange of both visible and invisible items, so it represents a wider and a
better picture of country’s international transection than the BOT.

BOT (Balance of Trade): Balance of trade is the difference between the money
value of exports and imports of material goods and visible services. BOT may be
in surplus or deficit or in equilibrium. If the exports of the visible items are more
than the value of imports of visible items. Then the BOT is said to be positive or
favorable and is in surplus. If the exports are less than imports the BOT is
unfavorable and is in deficit. If exports are equal to imports then the BOT is said
to be in equilibrium.

The difference between balance of trade and balance of payment are as follows:

Balance of Trade Balance of payment

1. It records only merchandise 1. It records the transections relating
transactions. to both goods and services.
2. Balance of trade does not record 2. Balance of payment records
transections of capital. transections of capital.
3. It is the difference between imports 3. It is the difference between
and exports of a given economy payments and total receipts of a
during a certain period of time. specified economy during a certain
period of time.
4. It is a part of current account of 4. It includes balance of trade, balance
BOP of services, balance of unilateral
transfers and balance of capital
transection.
5. It captures the value of goods on all 5. It captures all visible and non-
exports and imports. visible economic transections in the
world.
6. It may be favorable, unfavorable, or 6. It always remains in balance in the
in equilibrium. sense that receipt side is always
 made to be equal to payment side.
7. It deals with the net profit or net 7. It deals with the proper accounting
loss that a country incurs from the of the transections conducted by the
import and export of goods. nation.
8. Net effect of balance of trade can 8. Net effect of balance of payment is
be either positive, negative or zero. always zero.
9. It is not true indicator of economic 9. It is a true indicator of economic
relations or economic prosperity of performance of an economy.
a country.