Chapter 16: inflation, deflation, employment & unemployment

Question 1

Demand pull inflation

Answer 1

Where AD exceeds AS leading to an increase in the level of prices.

Question 2

Cost push inflation

Answer 2

Where increased costs of production result in firms increasing their prices, leading to an increase in the general price level.

Question 3

Tight labour market

Answer 3

Where firms have to increase wages to attract the labour that they require.

Question 4

Cyclical unemployment

Answer 4

Demand deficient unemployment that occurs as a result of the economic cycle.

Question 5

Demand deficient unemployment

Answer 5

Insufficient AD in the economy to employ the available labour.

Question 6

Frictional/ search unemployment

Answer 6

People between jobs

Question 7

Voluntary unemployment

Answer 7

Workers who are not prepared to take a job at current wage rates.

Question 8

Discouraged workers

Answer 8

Workers who leave labour market because despite numerous attempts they are unable to find a job.