2.1.3 Unemployment

Question 1

What is meant by ‘unemployment’?

Answer 1

those who are willing and able to work and are currently seeking work, but cant find anything at this given moment

Question 2

What is the Claimant Count?

Answer 2

the amount of people claiming JSA

Question 3

Give a reason why this may not be accurate

Answer 3

some may be ashamed to claim JSA so it does not show the whole unemployed population

Question 4

What is the ILO measure of unemployment?

Answer 4

Labour force survey is the survey of 60,000 households analysing their employment status

Question 5

Give a reason why this might not be accurate

Answer 5

it is under representative as it only represents part of the population

Question 6

Which of the two measures is typically higher and why?

Answer 6

ILO, because by law you must complete it

Question 7

What is meant by ‘underemployment’

Answer 7

when people are working in jobs where they would be over qualified

Question 8

Why did this become more relevant post-Financial Crisis?

Answer 8

Many industries were shut down

Question 9

What is meant by ‘employment’?

Answer 9

those in paid jobs right now

Question 10

What is meant by ‘economically inactive’?

Answer 10

those willing and able to work but have been withdrawn from the work force due to circumstances

Question 11

What is the difference between the population of a country and its labour force?

Answer 11

the population is everyone residing in the country

the labour force is everyone in the work force

Question 12

Why do we find that Employment and Unemployment sometimes rise at the same time?

Answer 12

Old people leave the workforce

Young people join the workforce

Question 13

What are the current retirement ages in the UK?

Answer 13

65 - 67

Question 14

What is a ‘discouraged’ worker?

Answer 14

able to work but not actively seeking work

Question 15

What is ‘structural unemployment’?

Answer 15

the industrial reorganisation due to technological changes

Question 16

What is ‘frictional unemployment’?

Answer 16

when people jump from one job to another

Question 17

What is ‘seasonal unemployment’?

Answer 17

when the industry doesn’t need workers all year round

Question 18

What is ‘demand deficient-’ or ‘cyclical unemployment’?

Answer 18

when there’s a lack of demand, usually during times of economic decline or recession

Question 19

What is ‘real wage inflexibility’?

Answer 19

when the real wage rate is above the equilibrium wage rate

Question 20

Which of these types of unemployment is most likely to result in long term unemployment?

Answer 20

structural unemployment

Question 21

How would a lack of skills in an economy effect the unemployment rate?

Answer 21

unemployment would go up

Question 22

What is meant by ‘net inward migration’?

Answer 22

the difference between emigration and immigration

Question 23

What is the likely effect of ‘net inward migration’ on employment rates?

Answer 23

employment rates go up

Question 24

What is the likely effect of ‘net inward migration’ on unemployment rates?

Answer 24

unemployment goes down

Question 25

How does unemployment affect the individual and his/her family?

Answer 25

poverty increases, disposable income goes down, MPS increases

Question 26

How does unemployment affect consumers?

Answer 26

MPC does down

Question 27

How does unemployment affect firms?

Answer 27

reduced profitability as they will have to cut back costs

Question 28

How does unemployment affect those remaining in work?

Answer 28

employees may have loss of productivity and motivation

Question 29

How does unemployment affect government?

Answer 29

loss of incentive to invest

Question 30

How does unemployment affect society?

Answer 30

more poverty, more crime

Question 31

Why might we expect, or even desire, the unemployment rate of an economy to be above 0%?

Answer 31

to maintain stable inflation

for real wage inflexibility