Unemployment

Question 1

What is the working age population?

Answer 1

Everyone between 16 and retiring age

Question 2

What is economic active?

Answer 2

People who are willing and available to work at the current real wage

Question 3

What is economic inactive?

Answer 3

People of working age who are not in the labour force

Question 4

What are the unemployment definitions?

Answer 4

Economist, claimant count and standardised unemployment rate

Question 5

What is an economist?

Answer 5

A person of working age who is without work, but available for work at the current wage rates

Question 6

What is claimant count?

Answer 6

The number of individuals actually claiming unemployment related benefits at any moment

Question 7

What is standardised unemployment rate?

Answer 7

A person is unemployed if they are of working age, without work or has actively looked for work in the past 4 weeks and is available to start in the next 2 weeks

Question 8

What are the advantages of claimant count?

Answer 8

Accurate and quickly calculated

Question 9

What are the disadvantages of claimant count?

Answer 9

It excludes those who are ineligible for benefits, changes in benefit rules changes the measured unemployment and some who receive Jobseeker’s Allowance are not employment but are working less than 16 hours per week

Question 10

Is demand of labour upward or downward sloping?

Answer 10

Downward sloping

Question 11

What is the labour force?

Answer 11

The number of people in working looking forward at each real wage rate; upward sloping

Question 12

What is job acceptance?

Answer 12

The number of people who are willing and able to accept a job at a given real wage rate; upward sloping

Question 13

Where is the labour market equilibrium?

Answer 13

The intersection between labour demand and the job acceptance

Question 14

What is voluntary employment?

Answer 14

The level of unemployment when all those willing and able to work at the given real wage are working

Question 15

What happens if the real wage is above the equilibrium level?

Answer 15

More people are willing to accept jobs than employers would want to hire, involuntary employment and many people would apply for each vacancy

Question 16

What is involuntary employment?

Answer 16

The number of people who are willing and able to work at the given real wage but who are not in employment

Question 17

What are the different types of unemployment?

Answer 17

Equilibrium (voluntary) and disequilibrium (involuntary)

Question 18

When does frictional unemployment occur?

Answer 18

When the number of unemployed equals the number of vacancies and the skills of the unemployed match those being sought by employers with vacancies

Question 19

What are the causes of frictional unemployment?

Answer 19

Imperfect information and job search takes time

Question 20

When does structural unemployment occur?

Answer 20

When the number of employed equals the number of vacancies and the skills of the unemployed don’t match those being sought by employers with vacancies

Question 21

What are the causes of structural unemployment?

Answer 21

A change in the pattern of consumer demand and a change in methods of production

Question 22

When does cyclical unemployment occur?

Answer 22

When there is a fall in AD with no fall in real wage rate

Question 23

What are the causes of cyclical unemployment?

Answer 23

Low level of AD

Question 24

When does classical unemployment occur?

Answer 24

When the real wage rate is deliberately maintained above the level at which labour supply and labour demand intersect

Question 25

What are the causes of classical unemployment?

Answer 25

Wages are sticky downwards, trade union monopoly power and the government setting a minimum wage