kt5

Question 1

Recession

Answer 1

Declining real GDP for two successive quarters (six
months)

Question 2

Demand
Management

Answer 2

Where government attempts to control aggregate demand
by adjusting tax rates, interest rates & government
spending in order to avoid booms (high inflation) and
busts (high unemployment)

Question 3

Discretionary
Fiscal Policy

Answer 3

Alterations to fiscal policy (government spending &
taxation) deliberately made by government to modify
Aggregate Demand in pursuit of its macroeconomic policy
aims (low inflation, high growth etc)

Question 4

Deflationary
Policy

Answer 4

Government policies to reduce aggregate demand

Question 5

Demand Deficient (Cyclical)
unemployment

Answer 5

unemployment caused by the fall in demand for labour which accompanies a fall in aggregate demand (and when real wages don’t fall wages are sticky downwards

Question 6

Frictional
Unemployment

Answer 6

Workers moving between jobs who are unable to fill job
vacancies between contracts due to imperfect information
in the labour market

Question 7

Structural
Occupational
Unemployment

Answer 7

Unemployment due to mismatch of skills demanded (in
job vacancies) and skills supplied by the unemployed
within a region

Question 8

Structural
Geographical
Unemployment

Answer 8

Unemployment due to geographical mismatch between
the job vacancies and the unemployed with those skills