3.2 Low Unemployment

Question 1

Employment

Answer 1

The use of labour in the economy to produce goods and services

Question 2

Unemployment

Answer 2

Occurs when workers able and willing to work at the current wage rates are unable to find employment

Question 3

Claimant Count

Answer 3

Method of measuring unemployment according to the number of people who are claiming unemployment related benefits

Question 4

Level of Unemployment

Answer 4

Number of people in the working population who are unemployed

Question 5

Rate of Unemployment

Answer 5

The percentage of the country’s workforce that is unemployed

Question 6

Unemployment Rate

Answer 6

Number of unemployed/Workforce * 100

Question 7

Seasonal Unemployment

Answer 7

Unemployment caused by a fall in demand during a particular season

Question 8

Frictional Unemployment

Answer 8

Unemployment caused by time lags when workers move between jobs

Question 9

Structural Unemployment

Answer 9

Unemployment caused by a permanent decline of an industry/industries

Question 10

Cyclical Unemployment

Answer 10

Unemployment caused by a lack of demand in the economy

Question 11

Benefits of Unemployment

Answer 11

• Over time, demand for some products falls, less workers are needed for production
• High unemployment means low wage rates, benefits firms as they don’t have to raise wage rates to attract unemployed workers competing for the jobs
• Low wage rates means lower costs and more competition within firms, helps them compete with firms in other countries

Question 12

Costs of Unemployment to Individuals

Answer 12

• Lower Living Standards (due to low income)
• Individual Problems (eg. low status/self esteem, affects family relationships)
• Excluded Workers (workers become unemployable)
• Costs to Taxpayers (greater level of unemployment means greater cost to taxpayers, more benefits have to be paid out to government)

Question 13

Costs of Unemployment to Government

Answer 13

• Labour resources are wasted (economy using all factors of production, economy at full capacity, no idle resources)
• Unemployment results in more unemployment (cyclical unemployment)
• Budget Deficit (government spends more than it receives in tax revenue)

Question 14

Costs of Unemployment to Regions

Answer 14

-Unemployment often spread unevenly throughout the country (some areas suffer higher employment rates than others, these areas could become ‘depressed areas’)