lesson 13- unemployment

Question 1

what is unemployment

Answer 1

people willing and able to work, but don’t

Question 2

what is full employment

Answer 2

everyone is employed in an economy

Question 3

what is the labour force survey (LFS)

Answer 3

measures unemployment (age 16-65)
-samples
=4.3%

Question 4

what is the claimant count

Answer 4

number of people claiming jobseekers allowance/ universal credit
=1.8 million

Question 5

what is the economic inactivity rate

Answer 5

people not working and not looking for a job
=21.8%
-havent been seeking work within the last 4 weeks and cant work within the next 2 weeks

Question 6

what are the limitations of unemployment status

Answer 6

-only a sample
-once a month
-time lag
-discouraged workers who have given up aren’t counted
-inaccuracy of claimant count
-age not considered
-many people not included e.g. hidden economy

Question 7

as economy grows, unemployment ____. on a ___ delay as firms wait for consistent/reliable growth. Unemployment may stay ____ as economy grows due to skilled labour and tech

Answer 7

falls
time
high

Question 8

what are the benefits of full employment

Answer 8

-GDP/growth
-more demand due to disposable income
-consumer and firm confidence
-more taxes
-fewer benefits (gov)
-ability to export
-people gaining skills due to training in work

Question 9

why does regional unemployment happen

Answer 9

-lack of resources

-lack of growth

-lack of government intervention

-lack of population

-lack of infrastructure
(transport)

-lack of confidence

-lack of business
investment

-lack of skills

Question 10

negatives of unemployment

Answer 10

-can cause fall in GDP
-negative multiplier effect
-resources not utilised full
-benefits payed (gov)
-less tax revenue
-poverty
-social issues e.g. crime

Question 11

what are the positives of unemployment

Answer 11

-inflation decreases as AD decreases
-consumers not paying taxes and gaining benefits can increase consumption
-spare capacity increases flexibility
-frictional unemployment -ease of labour mobility

Question 12

what is hidden unemployment

Answer 12

someone with high qualifications, but works at a low level job

Question 13

what is voluntary unemployment

Answer 13

people choosing not to work, may be due to having enough money or a benefits system, refuse job offers.
-economically inactive

Question 14

what is seasonal unemployment

Answer 14

people not being unemployed at certain times of the year, e.g. ski instructor in summer

Question 15

what is frictional unemployment

Answer 15

short term (>4 weeks)
-people moving between jobs

Question 16

what is structural unemployment

Answer 16

long term changes in a economies structure, e.g. industrial decline, de industrialisation

Question 17

what is technological unemployment

Answer 17

capital taking the place of labour, automation meaning people lose their jobs, e.g. robots

Question 18

what is cyclical unemployment

Answer 18

a fall in GDP (AD) following the business cycle of economic growth
-aka demand deficient

Question 19

what is real wage/ classical unemployment
-draw

Answer 19

wages are inflexible downwards-they are stuck too high above the level needed to reduce unemployment
-die to minimum wage legislations, trade unions etc
-unemployed workers may be prepared to work for less
-employers may be prepared to take on more workers at a lower rate, but cant

https://www.google.com/imgres?q=what%20is%20real%20wage%2F%20classical%20unemployment&imgurl=https%3A%2F%2Fwww.learn-economics.co.uk%2FGraphs%2FClassical-Unemployment.svg&imgrefurl=https%3A%2F%2Fwww.learn-economics.co.uk%2FClassical-unemployment.html&docid=HvxA7imdyXK__M&tbnid=5aTwMCoqkVCv7M&vet=12ahUKEwjOkaDb2feKAxX2RkEAHUfNKHYQM3oECBoQAA..i&w=800&h=711&hcb=2&ved=2ahUKEwjOkaDb2feKAxX2RkEAHUfNKHYQM3oECBoQAA

-demand for labour is lower than supply of labour as minimum wage is above the wage at equilibrium
-therefore full employment cant be obtained

Question 20

what is the natural rate of unemployment

Answer 20

rate of unemployment when the labour market is in equilibrium
-due to the idea that people will always be unemployed
=difference between those who would like a job at the current wage rate and those who are willing and able to take a job
-shows frictional and structural unemployment

Question 21

what happens when there is more employment

Answer 21

businesses have a greater pool of applicants, so less upward pressure on wages
-potential loss of skills in new recruits

-governments gain income tax revenue
-governments pay less unemployment benefits