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Demand Deficient Unemployment
Demand deficient unemployment, also known as demand-side unemployment or Keynesian unemployment, occurs when there is not enough demand for goods and services in the economy, leading to a reduction in production and a corresponding reduction in employment.
This type of unemployment can occur during economic recessions or downturns, when consumers and businesses reduce their spending.
In recent years, demand deficient unemployment has been a significant issue in many parts of the world. For example, the COVID-19 pandemic has resulted in a sharp decrease in demand for many goods and services, leading to widespread job losses and increased unemployment.
Other recent examples of demand deficient unemployment include the global financial crisis of 2007-2008, and the European sovereign debt crisis of the 2010s. In these cases, a combination of economic factors, such as overproduction, financial instability, and government debt, led to a reduction in demand and an increase in unemployment.