examen éco

Question 1

unemployment definition

Answer 1

according to the international labour organisation, unemployment is defined as the people of working age, who are without work, available for work and actively seeking employment.

Question 2

unemployment rate definition

Answer 2

the unemployment rate is the number of people unemployed expressed as a percentage of the total labour force

Question 3

unemployment calculation formula

Answer 3

number of unemployed
———————————– X100
total labour force

Question 4

complications when measuring unemployment : underestimation

Answer 4

hidden unemployment

• discouraged workers that have lost hope searching for a new job are no longer considered unemployed
• part time workers who wants a full-time job, but have to stay in the current one while searching for a new one
• over qualified workers that want to quit, but have to stay in the current one while searching for a new one

Question 5

complications when measuring unemployment : overestimation and inequalities

Answer 5

overestimation : illegal activities

inequalities: the unemployment rate is an average of a whole country, therefore it is very likely to mask inequalities
- geographical disparities (more jobs in inner cities that rural zones)
- age disparities (unemployment rate U25 higher than the national average
- ethic disparities (prejudices and educational opportunities)
- gender disparities (in industrials sectors, much more women unemployment)

Question 6

costs of unemployment (3)

Answer 6

to the unemployed : less income - lower standards of living - high level of stress - anxiety, depression, relationship breaking and suicide.

to society : higher poverty - increase in homelessness, crimes, gangs and vandalism

to the economy : loss of potential output - less tax income - higher spending

Question 7

factors of unemployment + pool concept

Question 8

types of unemployment (5)

Answer 8

• cyclical ( demand efficient - Keynesian )
• structural unemployment
• frictional unemployment
• seasonal unemployment
• real wage unemployment (classical)

Question 9

cyclical unemployment

Answer 9

• or Keynesian / demand deficient
• associated with the cyclical downturns in the economy ( example: recessions or COVID19 pandemic)
• as an economy moves into slower growth, aggregate demand will fall, as consumers tends to spend less money on goods and services
• the fall in consumer’s demand is likely to lead to a fall in the demand for labour (higher unemployment)
• see graphs

Question 10

how do we cure cyclical unemployment ?

Answer 10

• government should intervene to bring an increase in aggregate demand trough the use of fiscal or monetary policies
• fiscal policies : more government spending will result with a higher aggregate demand. Example: lower taxes, increasing money production or banks decreasing interest rates

Question 11

frictional unemployment

Answer 11

short term unemployment that occurs when people are in between jobs or are waiting to get their first one.

• not perceived as negative, as the goal for the workers is to be more productive
• even though government wishes to have 0 unemployment, the existence of frictional unemployment makes it impossible
• example: student that just graduated

Question 12

how do we cure frictional unemployment ?

Answer 12

by improving the sharing of jobs offers, through internet, job centres and newspapers