Macroeconomics - L9 Full Employment Flashcards
Provide a definition for the government’s goal of full employment.
The level of unemployment that exists when the government’s economic growth goal is achieved and where cyclical unemployment is non-existent, generally accepted to be 4 to 4.5%.
What is cyclical unemployment?
Provide an example.
Cyclical unemployment is directly related to economic growth. Cyclical unemployment is high when economic growth is slow.
Eg: A drop in production due to a reduction in aggregate demand in an economy causes cyclical unemployment.
What is structural unemployment?
Provide an example.
Structural unemployment occurs where the skills of the unemployed do not match the skills required by industry or the economy.
Eg: Cars are not manufactured in Australia anymore. When the factories first closed there would have been people with skills that were no longer required by the economy.
Eg: Supermarkets replacing customer service staff with automated / self-serve checkouts.
What is frictional unemployment?
Provide an example.
Frictional unemployment occurs where a person is unemployed for a period of time while they are moving from one job to another.
Eg: between jobs, resigned and waiting to start the next job
What is seasonal unemployment?
Provide an example
Seasonal unemployment occurs where a person is unemployed because their skills are only in demand at certain times of the year
Eg: ski instructors, fruit pickers, hospitality workers, tour guides
What is hardcore unemployment?
Provide an example.
Hardcore unemployment occurs where a person is unemployed due to mental health, physical health or other characteristics that prevent them from working over the long term.
Example: physical disabilities, mental illness
List three impacts of unemployment.
- Loss of Gross Domestic Product
- Loss of tax revenue
- Reduction in living standards
