2.1.3-4 Flashcards
Can you explain why measuring unemployment is tricky?
Some people will claim unemployment benefits while still working and others who are unemployed won’t report their situation
Whats the claimant count?
Counts the number of people getting unemployment benefits. like JSA. To qualify they have to be actively looking for work.
Whats the strengths of the claimaint count?
Misses some unemployed people not everyone can claim JSA such as partners who earn a lot. Some unemployed people don’t even apply.
Whats the weakness of claimant count?
A few people may claim JSA if they are secretly working
Whats Unemployment?
people ready and willing to work without a job. They are actively looking for work and can start work within 2 weeks
Whats underemployment?
People with a job but skills or time are not fully used. Like someone who wants full time work but works part time
Why do changes in Employment and Unemployment matter on in consumers?
- Unemployment reduces income and lowers living standards
- Jobs can harm mental health and well being
Why do changes in Employment and Unemployment matter on in Firms?
More unemployed people means firms have more workers to choose from, often at lower wages cutting costs
- Training costs can increase if workers have been unemployed for a long time
Why do changes in Employment and Unemployment matter on in workers?
- Joblessness wastes skill and time
- Long term unemployment can lead to skill loss
- Workers may face wage reduction as labour supply rises
Why do changes in Employment and Unemployment matter on in Government?
Higher unemployment means more spending on JSA which takes more money away from priorities
Why do changes in Employment and Unemployment matter on in Society?
Unemployment wastes potential as people could be producing goods and services
- Rising unemployment can also lead to more crime
Why does unemployment happen?
When the demand for the goods and services decreases over time leading to job losses UK.
Why does unemployment happen?
Skills mismatch: If workers doesn’t have skills that can easily transfer into another industry they may be unemployed
Geographical issues: If workers cant move to places where jobs are available they could stay unemployed
Technology: Machines and robots coul replace humans in jobs
What is frictional unemployment?
This is the short period of time of leaving a. job and finding another one. It’s temporary and happens to a lot of people like people graduating or moving to another job. Not harmful to economy
what is seasonal unemployment?
Some jobs are only available in certain time of the year like tourist times or summer or winter. This causes them to be unemployed
What is demand deficiency?
When there isnt enough demand for goods and services usually during economic recessions. When people stop spending money businesses have to cut back on what to spend money on which leads to more unemployment
What causes demand deficiency?
Economic decline: When the conomy is doing badly and businesses cant sell enough products so they lay off workers
Increased productivity; When companies get more efficient they need fewer workers to produce same amount of goods
What is real wage inflexibility?
Sometimes wages are set too high which can cause unemployment. If wages don’t adjust to match demand business can’t afford to hire many workers. Classical economists believe if wages are flexible unemployment could be reduced.
Whats the problems with real wage inflexibility?
- Cutting wages during tough times can lead to even less spendings and economic problems
- The real world doesn’t always work like a perfect market so this solution doesn’t always work
What is Migration?
When people move to a new country for work, they often bring skills that can improve the local workforce. This can make the economy more globally competitive.
Migration on Wages?
migrants may accept lower wages which lower the wages for the lower income workers in a host country.
Skills and Employment on Migration?
people with higher skills and more likely to find a job. Economies need a skilled workforce to grow so workers need to keep improving their skills to stay employed.
Microeconomics on wages?
Looks at individual decisions and impact on specific groups like how job losses affect workers or businesses
Macroeconomics on wages?
This looks at the bigger picture like unemployment rate in economy
Whats the balance of payments?
Record of all the money flowing in and out of a country due to trade and financial transaction.
What does a balance of payments show?
How much a country spends on exports,imports. Exports bring money into country so they are positive. Imports send money out so they are negative
What does a current account do?
Tracks trade in goods and services
What does a capital account do?
tracks investment, like buying property or business abroad
What is official financing account?
Tracks how the government manages any money imbalances
What does the current account measure?
Exports and imports. If country has more exports than imports it has an account surplus
Explain UKs imports and exports in Current account?
UK has a surplus in services (tourism and banking) but a deficit in goods (cars and electronics).
Overall UK has account deficit meaning it spends more on exports than imports overall can damage economy.
Why does the current account matter?
- Makes sure people have jobs
- Keeping prices steady
- ensures the economy grows steadily overtime
- Avoiding big long term deficits
What affects the current account?
When Uk economy grows people earn and spend more. Includes spending on imports meaning deficit can get bigger. During recessions people spend less
Whats cost push inflation?
If imports like oil get more expensive UK businesses face higher costs and causes CPI
How does Trade connect economies?
Countries are interdependent because they trade with each other.
- If a major trading partner like EU has economic problems it can buy fewer goods from UK. Hurts UK’s economy
- Meaning what happens in one country affects other countires
