Chapter 6 Flashcards
how to calculate the rate of unemployment
(No. of unemployed/ labour force) * 100
Seasonal unemployment
results from regular changes in employment / labour demand at different times
of the year. This will affect some industries more than others
Frictional unemployment
results from people moving between jobs. It will
be seen through workers experiencing short spells of unemployment.
Structural unemployment
arises from the mismatch of skills and job opportunities as the pattern of labour
demand in the economy changes. It often involves long-term unemployment and is prevalent in regions
where industries go into long-term decline
Cyclical unemployment
results from the cyclical relationship between demand, output, employment
and unemployment. It is caused by a fall in general levels of demand, which can lead to businesses
making workers redundant because they lack confidence that demand will recover. This can lead to a
loss of real national output.
how can frictional unemployment be created if a video tape are recorders is no longer in demand
There same time consumers will have an increased demand for other goods such as tablet
computers. There will be some frictional unemployment as workers move from producing video recorders
to tablets. This unemployment was necessary to reflect these changes in demand
how does unemployment decreases labour costs be and a firm become more competitive
When there is a substantial amount of unemployment in a particular industry, creating competition for
jobs, then wage rates will be unable to rise as other individuals will be willing to work for the lower wage
rate. This can be seen as a benefit to firms as it will keep their labour costs down and help to make them
more competitive.
Costs to individuals if they lose their job
Workers who lose their jobs may then be subject to lower living standards. Although they will be able to claim
benefits, these will be less than the income that they were earning. They will therefore be able to buy less goods
and services
The costs to the government of unemployment
The government could end up running a budget deficit where the government is spending more on benefits
than it receives from taxation.
