3.2 Low Unemployment

Question 1

What is meant by employment?

Answer 1

When people who are willing and able to work can find a job.

Question 2

What is the purpose of the labour factor of production?

Answer 2

To produce goods and services.

Question 3

What is the reward for labour and what is it used for?

Answer 3

Wages are a main source of income and are used to pay for essential goods and services.

Question 4

What is full employment?

Answer 4

When everyone willing to work is able to find a job.

Question 5

What is unemployment?

Answer 5

When people (above 16) are willing and able to work, cannot find a job.

Question 6

What people are not included in workforce or unemployment figures?

Answer 6

• Pensioners
• Full-time students
• Sick
• Family carers

Question 7

How is the level of unemployment measured?

Answer 7

Through Claimant Count.

Question 8

What is Claimant Count?

Answer 8

It is a measurement of unemployment which records the number of people claiming unemployment-related benefits such as universal credit and jobseeker’s allowance.

Question 9

How do people claim unemployment-related benefits?

Answer 9

They have to register for them.

Question 10

What is the difference between unemployment rate and unemployment level?

Answer 10

The unemployment rate is the percentage of a country’s workforce that is unemployed, however the unemployment level is the number of people who are without a job.

Question 11

How is the unemployment rate calculated?

Answer 11

(Number of unemployed ÷ workforce) × 100

Question 12

What are the four types/causes of unemployment?

Answer 12

1. Cyclical
2. Frictional
3. Seasonal
4. Structural

Question 13

What is cyclical unemployment?

Answer 13

It is caused by problems in the economy, so total demand falls. Therefore, fewer workers are needed.

Question 14

What is frictional unemployment? Give an example.

Answer 14

When workers are ‘between jobs’ for a short time. Eg: someone has left a job to start a new one soon.

Question 15

What is seasonal unemployment? Give an example.

Answer 15

When workers are without jobs because their labour is only demanded at certain times of the year. Eg: ice cream sellers.

Question 16

What is structural unemployment? Give an example.

Answer 16

Workers without employment due to a decline in industry. Eg: steel production in the UK.

Question 17

What are three benefits of unemployment?

Answer 17

• It is easier to recruit if more people are looking for employment
• Workers may have to accept lower wages to get a job, making firms more competitive internationally
• Lower wages means individuals have to buy less, lowering inflation

Question 18

What are three costs of unemployment to individuals?

Answer 18

• Lower standard of living as individuals have less income, so can only afford a few goods and services
• May be excluded as firms don’t want to hire the long-term unemployed
• Taxes increase for the employed to pay unemployment benefits

Question 19

What are three costs of unemployment to the government?

Answer 19

• Budget deficit due to increased expenditure on unemployment benefits and decreased income tax revenue
• Lower output, so labour is being wasted
• Can incur more costs, such as health problems due to the employed having less money to spend on healthy food

Question 20

What are three costs of unemployment to regions?

Answer 20

• A region may need more help from the govermnent if industry has declined in that region
• Can lead to low regional standard of living, resulting in shops closing because of lack of spending