Employment

Question 1

Measures of unemployment

Answer 1

• The claimant count
• UK labour force survey

Question 2

The claimant count

Answer 2

Counts those claiming unemployment benefits

Question 3

UK labour force survey

Answer 3

Asks people directly if they meet the criteria:
- Been out of work for 4 weeks
- Able and willing to start in 2 weeks
- Should be available 1 hour a week
- More accurate because includes part time employment

Question 4

Significance to consumers

Answer 4

• less disposable income
• psychological consequences

Question 5

Significance to firms

Answer 5

• larger supply of labour - wages fall
• but consumer spending will fall
• cost to retain workers
• inferior goods may see sales rise

Question 6

Significance to workers

Answer 6

• waste of workers resources
• could lose existing skills

Question 7

Significance to the government

Answer 7

• if employment rate increases, gov. spend more on JSA (opportunity cost)
• receive less revenue from income and direct tax

Question 8

Significance to society

Answer 8

• opportunity cost
• negative externalities (crime and vadalism)

Question 9

Significance in the rate of inactivity

Answer 9

• economically inactive - not actively looking for jobs
• if this increases, the labour force may decrease -productive potential of the economy may fall

Question 10

Causes of unemployment

Answer 10

• Structural
• Seasonal
• Frictional
• Cyclical

Question 11

Structural

Answer 11

• Long term decline in demand for goods and services in an industry.
• labour replaced by capital

Question 12

Frictional

Answer 12

• time between having jobs
• looking for another job

Question 13

Seasonal

Answer 13

• During certain parts in the year

Question 14

Cyclical

Answer 14

• Caused by a lack of demand
• Usually occurs during the economic decline or recessions
• Firms make workers redundant - profits fall due to lack of demand.