AN ANALYSIS ON THE EFFECTS OF MONEY SUPPLY ON EMPLOYMENT IN NIGERIA ECONOMY

ABSTRACT

From monetary theories, money supply plays stimulative roles in an economy. It stimulates employment thereby ameliorating the problems of unemployment, inflation. It was this knowledge that informed the researcher to under take an investigative study into the effect of money supply on employment in Nigeria Economy.

A thorough literature review was done on the subject matter, especially, as it pertains to Nigeria. The review showed that money supply has consistently been on the increase but employment has not been rising proportionately with it resulting in persisted inflation and unemployment.

Also, an overview of employment situation in Nigeria was taken and the picture, as in the literature review emerged. Following from this it became necessary to trace the factors inhibiting employment in Nigerian economic system. Among the factors identified were poor investment climates, infrastructural problems, poor volume of money in circulation etc.

In respect of our view of related literature and findings as regards the subject matter of this study, hence the following results were obtained.

There is an adverse relationship between money supply and level of unemployment. It was found that increasing money supply reduces unemployment, but however less proportionately.

CHAPTER ONE

INTRODUCTION

1.1 STATEMENT OF THE PROBLEM

A study of this sort is necessary owing to certain serious problem confronting the economy of Nigeria. It has been evident that since the Nigerian Civil War ended in the year 1970. The problem of money supply and its effect on the area of unemployment have been an economic problem that is disturbing the economic growth and Development of the country.

This problem has been of great concern to every Nigerian and the government of the country. Unemployment is generally an economic, social and political problem which causes economic waste. Lowers the National Income (GDP and GNP) causes human suffering and reduces the level of development. As a result of this, many jobless able bodied young men and women roam the streets daily perpetrating social ills such as armed robbery and prostitution.

This course of study is investigating on those factors that affect unemployment in the country, through the volume of money in circulation. And also how those factors affect the economic efficiency or growth and Development of the Nigerian economy.

1.2 RATIONALE OF THE STUDY

This study concerning Analysis on the Effect of Money Supply and its effect on Employment on Nigerian Economy is of great importance to know how to solve the problem of unemployment in the country. With less than full employment in the economy, increasing money supply is expected to stimulate employment in the country. We therefore seek to analyze how increase in money have generally influence employment in Nigeria with the object of discovery how money supply could be most appropriately and effectively used to boost employment in Nigeria.

This work recognizes the importance of money in the economic life of a country like Nigeria. Hardly can any program intended to enhance employment succeed without money. In the light of the above study, however, one of the objectives of this study are to ensure proper and adequate reduction on the problems of unemployment in Nigerian economy.

The major objective of this study is to analyze the effect of money supply on employment in Nigerian economy.

1.3 SIGNIFICANCE OF THE STUDY

– The study will be of immense help to the government of Nigeria, Business firms, Commercial Banks and members of the public in general.

– It serves as a tool for government decisions in respect of its monetary policies aim at using money supply to boost employment.

– The fulfillment of this study will help the Commercial Bank in the allocation of Loans and advances to the productive sector of the economy to encourage employment opportunities.

– The study will also help the Economists and Accountants to manage the available resources efficiently and to Audit the account of the government.

– The study will serve as a measure for growth and development of the economy.

1.4 DEFINITION OF TERMS

UNEMPLOYMENT

This is a situation which exists when member of the labour force who is qualified and capable of doing the job but can not get a benefiting job to do.

UNEMPLOYMENT RATE

This is a measure of the extent of unemployment of the labour force at any particular time. It is also the proportions of labour force who were available for but did not do any work in the need proceeding the survey period.

MONEY SUPPLY

This means the total amount of money in the economy at any given point in time.

INFLATION

This is the persistence rise in prices of goods and services resulting in diminishing purchasing power of a given nominal sum of money.

INFLATIONARY RATE

This refers to a measure of the extent of inflation of any particular period of time.

ECONOMY

The relationship between production, trade and the supply of money in a particular country.