3.2 Low unemployment

• What is the definition of employment?

  The use of labour to produce goods and services
• What is unemployment?

  When willing workers cannot find jobs
• How is unemployment measured using the claimant count?

  By counting those claiming unemployment benefits
• What is the formula for calculating the unemployment rate?

  Unemployment rate = (number of unemployed x 100) / workforce
• If there are 500,000 unemployed people and a workforce of 10,000,000, what is the unemployment rate?

  5%
• If there are 1,500,000 unemployed people and a workforce of 20,000,000, what is the unemployment rate?

  7.5%
• What is structural unemployment?

  Unemployment caused by a permanent industry decline
• What are the benefits of low unemployment?

  • Reduces government spending on benefits
  • Increases consumer spending and demand
  • Stabilizes prices in the economy
  • Encourages productivity and skill development
• How does low unemployment affect government spending?

  It reduces government spending on unemployment benefits
• What impact does low unemployment have on consumer behavior?

  It increases consumer spending and demand
• How does low unemployment influence productivity?

  It encourages productivity and skill development
• What is the effect of low unemployment on tax revenue?

  It increases tax revenue from employed individuals