Unit 2-Area of Study 1-Employment, Population and Change

Question 1

What are 4 examples of someone whom is employed?

Answer 1

• working full time for profit
• working part time for profit
• self employed
• has a job but wasn’t present during the survey week due to strike, illness, vacation etc

Question 2

What are 4 examples of someone whom is not employed but still does work?

Answer 2

• voluntary
• self-sustenance
• illegal goods sale
• DIY projects

Question 3

What is the equation for:

Unemployment Rate

Answer 3

Unemployed * 100 / labour force

Question 4

What is the equation for:

Participation Rate

Answer 4

Labour force * 100 / population over 15

Question 5

What are 4 other measurements of the labour market?

Answer 5

• job vacancies
• aggregate weekly hours worked
• duration of employment and unemployment
• incidence of employment and unemployment

Question 6

What are 4 consequences of demographic change?

Answer 6

• cultural diversity
• social unitation
• size of local market
• size of labour force

Question 7

What are 4 consequences of unemployment on individuals?

Answer 7

• reduced income
• lowers self-image
• family unhappiness; tensions
• loss of health

Question 8

How does increasing unemployment affect the government?

Answer 8

• increases deficit
  
  • less people working → decreases revenue
  • more welfare benefit dependants → increases expenditure

Question 9

What effect does increasing participation rate have on PPF?

Answer 9

More people working → increases quantity of resource → expands PPF

Question 10

What effect does increasing employment rate have on PPF?

Answer 10

Increases efficiency → increases quality of resource → closer to frontier

Question 11

What is the difference between cyclical and natural unemployment?

Answer 11

• cyclical unemployment is caused by changes in the demand for labour (dictated by the business cycle), and as such is on the demand side
• natural unemployment is caused by changes in supply of labour, and as such is on the supply side

Question 12

What are 4 types of natural unemployment?

Answer 12

• structural unemployment
• frictional unemployment
• seasonal unemployment
• hard-core unemployment

Question 13

Explain the cause of the following type of unemployment:

Cyclical Unemployment

Answer 13

AD↓= cyclical contraction = businesses hiring less = unemployment↑

Question 14

Explain the cause of the following type of unemployment:

Structural Unemployment

Answer 14

Caused by changes in business operations resulting in job loss in the short term

Question 15

Explain the cause of the following type of unemployment:

Frictional Unemployment

Answer 15

Caused by contractors finishing a contract and waiting for employment

Question 16

Explain the cause of the following type of unemployment:

Seasonal Unemployment

Answer 16

Caused by jobs only being available at a certain time of year; unemployed for the rest of the year

Question 17

Explain the cause of the following type of unemployment:

Hard-Core Unemployment

Answer 17

Caused by personal attitudes that result in able and willing people not willing to work in certain jobs

Question 18

Which 2 macroeconomic policies can be emplaced to reduce unemployment, and how do they?

Answer 18

• expansionary monetary policy
  
  • interest rates↓= savings↓+ consumption↑= AD↑= unemployment ↓
• expansionary budgetary policy
  
  • income tax↓= consumption↑= AD↑= unemployment↓
  • expenditure↑= consumption↑= AD↑= unemployment↓

Question 19

Which 3 microeconomic policies can be emplaced to reduce unemployment, and how do they?

Answer 19

• privatisation of government assets
  
  • efficiency↑= productivity↑= profitability↑= employment↑
• tariff cuts
  
  • efficiency↑= productivity↑= profitability↑= employment↑
  • *may cause short term structural unemployment**
• targeted tax cuts
  
  • incentive to work because no longer taxed as much∴ earning more

Question 20

Which 6 policies can be implemented to reduce natural unemployment, and how do they work?

Answer 20

-training programs
-
-dole harder to get
-incentive to try and obtain employment
-abolish minimum wage
-employers can hire more people because it costs less
-raise school leaving age
-education↑=
-job sharing
-can allow 2 people to do half a job instead of both be unemployed
-incentives such as free gym access or free childcare