2.1.3 Unemployment

Question 1

What 2 measures do we use to measure unemployment?

Answer 1

• claimant count

- ILO Labour Force Survey

Question 2

What is the claimant count?

Answer 2

The number of people seeking benefits for being unemployment

Question 3

What is the ILO Labour Force Survey?

Answer 3

// want to work, has sought work for the last 4 weeks, and is available to start in 2 weeks
// found a job and is ready to start in the ext 2 weeks

Question 4

Why is the claimant count unreliable in measuring employment?

Answer 4

It only captures those who eligible for the Job Seekers Allowance, so it excludes those who are wealthy and do not need to work

Question 5

What is unemployment?

Answer 5

Those who are economically active but are not employed

Question 6

What does economically active mean?

Answer 6

Those who are of working age nut are not looking for work

Question 7

What does under-employment mean?

Answer 7

Where an individual is employed in a second-choice occupation. They are over skilled for their job, or work part time and want to work more hours

Question 8

What is structural unemployment?

Answer 8

Unemployment that occurs because of changes in economic activity, there has been a decline in an industry

Question 9

What is frictional unemployment?

Answer 9

Unemployment that occurs when people are between jobs

Question 10

What is seasonal unemployment?

Answer 10

Unemployment that occurs with a change in season

Question 11

What is cyclical unemployment?

Answer 11

Unemployment that occurs because of a fall in demand in the economy

Question 12

What is real wage inflexibility?

Answer 12

An argument that if real wages do not adjust downwards, the result would be persistent unemployment

Question 13

How does migration and skills affect employment?

Answer 13

Migrants who are skilled workers which is complementary to those of the economy will be beneficial, they will find work and increase AD. The issue arises when migrants that are un-skilled enter the country…

Question 14

Effect of unemployment on consumers?

Answer 14

Economy is operating below its capacity,, meaning less is being produced leading to a lower standard of living for consumers

Question 15

Effect of unemployment on firms?

Answer 15

Because fewer people are employed, firms will face lower demand for their goods and services, resulting in lower sales and revenue

Question 16

Effect of unemployment on workers?

Answer 16

Workers will have a lower standard of living,

Question 17

Effect on unemployment on the government?

Answer 17

Government has to pay more money for those seeking social security benefits, also they receive less tax due to less being employed

Question 18

Effect of unemployment on society?

Answer 18

Unemployment can cause social unrest and lead to more crime

Question 19

Reasons for underemployment?

Answer 19

• recession, lack of demand in the market

- increase of the use of technology in the workplace

Question 20

How does a high level of unemployment affect tax revenue?

Answer 20

Less employed, less tax. Reduction in the amount of spent on public services. Can increase the budget deficit

Question 21

How does a high level of unemployment affect the rate of inflation?

Answer 21

Less unemployment leads to less disposable incomes, fall in consumption. Can decrease demand-pull inflation

Question 22

How does a high level of unemployment affect economic growth?

Answer 22

High unemployment decreases the availability of goods and services that are being produced. Can lead to a negative multiplier effect