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Question 1

4 Markets:

Answer 1

Factor Market: Resources are sold in exchange for income for households.
Product Market: Goods and services sold in exchange for income for firms.
Financial: Lenders, savers, or borrowers, e.g., banks.
Overseas: Exports/Imports are traded.

Question 2

Costs of unemployment (economic costs)

Answer 2

Waste of resources (Labour)
skills atrophy
increasing spending for government (welfare payment)
Decreasing revenue (tax) for government

Question 3

Costs of unemployment (social costs)

Answer 3

Rich gets richer and poor get poorer (society becomes less harmonious)
Less income
Ethical and moral issues
People have less self esteem
poorer health outcomes

Question 4

the phillips curve

Answer 4

The Phillips curve shows the relationship between unemployment and inflation. The curve is an economic theory that inflation and unemployment have a stable and inverse relationship. Thus, if unemployment decreases then inflation rises, and vice versa.

Question 5

full employment:

Answer 5

the situation where the quantity of labour demanded is the quantity of labour supplied in the economy

Question 6

NAIRU (full employment) is the non accelerating inflation rate of unemployment

Answer 6

The NAIRU is the lowest unemployment rate that can be sustained without causing wages growth and inflation to rise. It represents the level of “spare capacity” in the economy, indicating how far the economy is from operating at full capacity.