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Unemployment Revision Question and Answers - Economics

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´╗┐ECON 4 - Unemployment Revision Questions 1. What is the definition of unemployment? Unemployment are those without a job but who are seeking work at current wage rates. 1. How is unemployment measured in the UK? Claimant Count The Claimant Count measure includes people who are eligible to claim the Job Seeker?s Allowance (JSA). The data is seasonally adjusted to take into account predictable seasonal changes in the demand for labour. Labour force Survey The Labour Force Survey counts those who are without any kind of job including part time work but who have looked for work in the past month and are able to start work immediately. The figure includes those people who have found a job and are waiting to start in the next two weeks 1. ...read more.


What is structural unemployment ? give 3 causes and examples of each? Structural unemployment occurs when people are made unemployed because of capital-labour substitution (which reduces the demand for labour) or when there is a long run decline in demand in their particular industry. Also, globalisation with increase competitiveness and lower wages in international countries may see businesses moving abroad. Structural unemployment exists where there is a mismatch between their skills and the requirements of the new job opportunities. Eg ? Tesco replacing checkout workers with Automatic machines (capital labour substitution) Eg ? The closure of the coal mines in Durham due to decline in demand for the industry Eg ? The closure of the Ford factory making ?Transit? vans in 2013 while moving operations to Turkey (due to globalisation). ...read more.


and will therefore be collecting less tax which may reduce in a greater budget deficit. 1. Explain the link between AD and unemployment? Unemployment Increases ? AD Decreases, vice versa. If an economy is in a recession, there will be lower demand for goods and services, businesses will invest less, may cause structural unemployment and more people will be made unemployed. 1. What is current level of unemployment in UK + Eurozone? UK ? 7.2% - 2.34 million Eurozone- 12.1% - 19 million people 1. State 2 situations where you can reduce unemployment without suffering from rising inflation? Situation 1- There is spare capacity within an economy, as shown in the diagram below: (AD1 to AD2) http://www.s-cool.co.uk/a-level/assets/learn_its/alevel/economics/aggregate-demand-and-aggregate-supply/supply-side-policies/2007-12-04_120319.gif Situation 2 ? AD may rise yet lower costs of production can affect prices. Therefore, if costs of production decrease and AD increases, AD will shift to the right, and also SRAS will shift to the right too. http://img.sparknotes.com/figures/3/31d5c746a3dad4ab3eb48ba28b0fc043/asadshift1.gif ...read more.

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