First factor that I would try to improve is the inflation rate, which is relatively high in Finland, and due to taxes the prices are more expensive than for example here in the United States in general. Inflation means that the general level of prices for goods and services is rising and the purchasing power is falling subsequently as a result of inflation. (investopedia.com) The inflation rate slowed down in March 2014 to 1,1%. (Finland´s national authority for collecting statistics) This is a big improvement, because it was 2,2% in 2013 (The World fact book). Policies to lower inflation should be improved in order to slow down the increase of the prices and the money losing its value, and ...view middle of the document...
Another way to get money out of the circulation is to sell government bonds, meaning that consumers give money to the government who pays interest rates, and it won´t spend the money in for instance 25 years. Still, there are always factors that are hard to take in notice and have an effect on, such as if people expect prices to increase and gradually the wages increase. Low inflation rates make the loan givers loose less and exporting is easier because the competitiveness isn´t poorer compared to other countries when it comes to production costs and making cost estimates for the future, so lowering the inflation rate is good for the economy.
Another factor, unemployment rate (how many people belonging to the labor force is not working currently), including youth unemployment rate, should be decreased in order to create a better economy, too. Finland´s unemployment rate in 2013 was 8,1%. (World Fact book) The wanted unemployment rate is 3-5% of the labor force, and the number is over that, because many people lost their jobs as a result of the recession started in 2011. Finland should aim to cut down the number of people not having a job, because high unemployment rate leads normally to the decrease of overall healthy of the economy since less people pay taxes and are productive, decreasing the GDP of the country. Low unemployment rates lead to, for instance, more output, more income, more consumption, less poverty and less need for welfare payments. Working is also good for people´s self-esteem, because those who work feel better about them and can afford to spend more. Government will also receive more tax dollars that can be invested in improving the economy, and reducing unemployment will most likely have a positive effect on the social divisions in society. Ways to achieve a lower unemployment rate are to create more jobs, raise unemployment benefits and reduce taxes for the lower paid. There´s still always some people without a job and this is needed, because the technology will keep on improving and people looking for better job opportunities! The economy must be in a sustained period of economical growth because expanding the workforce requires relatively high aggregate demand. In order to avoid structural unemployment, the employability of the labor supply must change. Employers should have right skills to take up the available job opportunities, so the importance of education should be highlighted in the economy. Some programs for unemployed could be offered so that they could re-employ easier and improve the skills they need and the incentives to find work, in other words improve the human capital of the workforce. This way people will be able to take up new jobs that are created as the economy improves. It requires the government to invest money and time, but lowering unemployment rates and especially youth unemployment is a way to improve the economical situation in the long run. I suggested that the interest rates should be...
