Seminar paper from the year 2006 in the subject Business economics - Economic Policy, grade: B, University of Applied Sciences Essen (IOM), course: General Economics, language: English, abstract: The German labour market is one of the four key determinants of economic welfare. In this paper the role of the state and the state acting on the labour market will be discussed. Firstly it will be shown, which assignment has been given to the state within the German law. Secondly the instruments of monetary and fiscal policy will be shown as well as individual governmental activities, which have impact on the German labour market. In a further step, current governmental activities will be assessed whether they are able to decrease unemployment or not. In particular, it will be shown that instruments increases overall economic demand, reducing labour time or regulating labour market do not lead to increased economic welfare but increasing unemployment