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Unemployment is one of the key indicators economists and politicians use when assessing the strengh of the U.S. Economy. Unemployment is generally causes by weakening economic conditions including profit declines, low growth, high rates of inflation, and improper monetary balance. When Unemployment occurs the economy is said to not be maximizing its potential output and failing to utilize its capital.

Whenever Unemployment reaches levels that lawmakers and central bankers find unacceptable, they amend the current policieis to stem the negative effects. If people are unemployed it is assumed that they will not be spending as much as they would be were they employed. One program, unemployment insurance, was created to address the fallout in consumer spending. Solutions to ameliorate the effects of unemployment such as the stimulus bill will only be discussed more and more until the financial crisis subsides. The information that follows discusses the negative effects of those stimulus efforts and the importance in maintaining a free and flexible market to solve this problem.

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