Unemployment

• What is the unemployment rate?

  The unemployment rate is the percent of people that aren't working.
• What is the unemployment level?

  The unemployment level is the amount of people that aren't working.
• How can unemployment rates be observed?

  Unemployment rates can be observed with claiming accounts and workforce surveys.
• How do unemployment and inflation relate to each other?

  Unemployment and inflation go against each other, as high unemployment leads to lower spending and falling prices.
• What is the graph that illustrates the relationship between unemployment and inflation?

  The Phillips curve.
• What happens to prices when unemployment is high?

  When unemployment is high, people save money, causing prices to fall.
• How might the government reduce unemployment?


  By spending more on training.
• What is a potential downside of raising taxes on the rich to reduce inequality?


  It may disincentivize workers.
• How does the fiscal deficit relate to low unemployment in the short run?


  The fiscal deficit may conflict with low unemployment targets in the short run.
• What is the definition of unemployment?


  Someone who is actively seeking a job but is currently without a job.
• What are the two main measures of unemployment?

  Claimant Count (CC) and International Labour Organisation (ILO) measure.
• How is the Claimant Count (CC) calculated?


  It is made up of people receiving Job Seekers' Allowance.
• What does the International labour oraganisation measure of unemployment require?

  That someone has been actively seeking work for the past four weeks and is ready to start in the next two weeks.
• How often is the Claimant Count (CC) calculated?


  Monthly.
• How often is the International labour oraganisation measure calculated?

  Quarterly.
• Why might the Claimant Count (CC) underestimate unemployment?


  Some people do not claim due to social stigma or lack of knowledge.
• What does unemployment indicate about the economy?


  If people are unemployed, their income is lower, leading to a lower standard of living.
• What does being underemployed mean?


  Workers who want more hours but cannot get them.
• What is productivity defined as?


  The output per unit of input per hour.
• How is labour productivity measured?


  As the output per worker per hour.
• What is the significance of higher productivity?


  It allows goods and services to be sold at a cheaper price to international markets.
• What is the relationship between productivity and international competitiveness?

  Higher productivity allows for cheaper production, enhancing competitiveness.
• What is a non productive expenditure


  When the governement spend on something that may not help gdp such as removing grafiti but it will improve the standard of living
• What is seasonal unemployment?

  Regular seasonal changes in employment/labour demand in industries like tourism and agriculture
• What causes structural unemployment?

  It arises from a mismatch of skills and job opportunities linked to labour immobility
• What is frictional unemployment?

  Transitional unemployment due to people moving between jobs
• How does cyclical unemployment occur?

  It is caused by a fall in aggregate demand leading to a decline in real GDP and jobs
• What is the relationship between cyclical unemployment and aggregate demand?

  High cyclical unemployment indicates low aggregate demand
• What is labour shedding?

  It refers to firms reducing employment to cut costs during a recession
• Which countries in the European Union have faced major cyclical unemployment issues?

  Portugal and Spain
• What does the real wage theory of unemployment explain?

  • Labour supply is the number of people willing to work at a given wage rate
  • Equilibrium occurs at full employment when demand meets supply
  • Unemployment can occur when workers do not want to work at the prevailing wage
• What are the economic costs of high unemployment?

  • Lost output and economy inside the PPF
  • Fall in real incomes and lower living standards
  • Drop in tax revenues and higher welfare costs
  • Possible decline in labour supply due to brain drain
• What are the social costs of high unemployment?

  • Increase in relative poverty and welfare dependency
  • Extra demands on NHS due to stress-related illnesses
  • Link between persistent unemployment and social problems
• What are some benefits of high unemployment?

  • Reduced risk of inflation due to lower consumer spending
  • Pool of unemployed labour available for growing businesses
  • Rise in self-employment startups
• What are the labour scarring effects from high unemployment?

  • Loss of work experience and reduced employability
  • Gaps in CVs negatively influencing potential employers
  • Decline in quality of human capital
• What are the causes of youth unemployment?

  • Skill gaps and reluctance of employers to hire younger workers
  • Declining pension income leading to fewer early retirements
  • Weak macro fundamentals like low GDP growth
• What was the youth unemployment rate in the UK in August 2022?

  9%
• What are macro stimulus policies to reduce unemployment?

  Lower interest rates and infrastructure investment projects
• What are competitive policies to reduce unemployment?

  • Reductions in corporation tax to increase investment
  • Tax incentives for research and innovation spending
  • Enterprise policies to boost new business startups
• What are some barriers to lowering unemployment?

  • High levels of long-term structural unemployment
  • Complex welfare benefits and tax systems
  • High costs and unavailability of childcare