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level: Unemployment

Questions and Answers List

level questions: Unemployment

QuestionAnswer
What is Full Employment?-This is when Everyone of Working Age [No Students, 65+..] who wants to Work can find Employment at the Current Wage Rates -This doesn't mean everyone has a Job. People can be Between Jobs [Job Sharing]
Why go Governments aim for Full Employment?-Full Employment will Maximise Production and Raise the Standards of Living in the Nation. -Unemployment in the Nation therefore means the Economy will not be on the PPF, but rather Inside it.
What is Under-employment and why may it be an Issue?-Under-employment is when a Person has a Job, but it doesn't really Match them - Not taking their Skills, Experience or Availability for the Best Effect. This still means the Economy isn't at Full Capacity. -This can even be said about People who want Full Time Contracts and not Part Time Contracts
How is Labour and Consumer's Demand for Goods linked?-When Demand is Low [Negative Economic Growth] then Unemployment will Rise -Demand being High means Unemployment will Fall
What is Cyclical Unemployment? [Demand-deficient Unemployment] -Could it lead to a Doom Loop?-This usually occurs when the Economy is in Recession, or a Negative Output Gap. This can affect Any Industry -When AD falls, Unemployment will Rise. This is because Firms will have to Lay off Workers as Profits are Tanking -This may lead to a Doom Loop as People losing their Jobs leads to Further less Consumption, leading to more Job losses.. -But at the same time it depends how long the Economy takes to Recover. If its a Short Recession, then it won't have enough Time to Develop
What is Seasonal Unemployment?-This is when Demand for Workers in some Industries will not be Consistent Yearly. Tourism and Farming are 2 Key Examples where they have 'Peak Seasons' and just Slumps. Retailing is another
What is Structural Unemployment? -Can it lead to the Negative Multiplier Effect?-This is when a Certain Industry or Job has a Decline. This can be due to Changes in Consumers Needs, Technology or Cheaper Alternatives. -Traditional Manufacturing Regions [Shipbuilding in Liverpool] is usually Badly affected by this -Unemployment in Liverpool therefore means Less Spending, which can cause more Unemployment and Less Government Revenue
What are the 2 Types of Immobility posed on Labour?-Occupational: When Jobs decline overtime, and Workers in that Profession don't have the Skills to do the jobs that are Available [Transferable Skills] -Geographical: When Worker's unable to Move with a High Unemployment to go to another Region. This can be due to Economic, Social or other reasons.
Why may Structural Unemployment become more Common in the Future?-Technological Change in Products and Production Methods is Rapidly Increasing. Out of Date Industries will be Hit Harder, and less Workers needed to make Products -Consumer Spending will keep Changing as, due to the Internet, are better Informed making them able to Switch to Lower, Better Quantity Goods
What is Frictional Unemployment?-This is Unemployment that Workers face when Leaving 1 Job and Starting another -This happens even at Full Employment level as well Employees may want to Leave. That is Natural
What factors Influence how long Frictional Unemployment is?-During a Boom, Vacancies is Higher - Easier to find a Job. -During a Slump, the Opposite happens -Juicy Welfare Benefits means People may not Look for a New Job, or can take their Time in finding a New Job -Information Provision can mean People know, or won't know, the Type and Quality Jobs out there -Occupational and Geographical Immobility
What is Real Wage Unemployment? Use a Supply and Demand Diagram-This is when Real Wages are Pushed ABOVE the Equilibrium Level of Employment [Supply = Demand] This is due to Trade Unions wanting Higher Wages, or the National Minimal Wage [NMW] -NMW above the Equilibrium Wage [Minimal Price] means there will be a Excess in Supply, and thus Unemployment between the Amount Supplied and Amount Demanded
What can Help Real Wage Unemployment?-Productivity Rising, or Consumer Spending going up [Anything that Increases the Demand for Labour] will mean the Demand Curve will shift to the Right -This means the Unemployment size will Decrease
Overall, what are the Costs and Consequences of Unemployment?-Unemployed have Lower Incomes. This reduces Demand [AD] and Firms Profits [Negative Multiplier Effect] -Less Income Tax for Governments [Budget Deficit] and Less Consumption means less Indirect Tax [VAT] Government spends more on Unemployment Benefits -Areas with High Unemployment leads to Crime and Health Problems [Negative Externality] -Workers who have Lacked a job for a Long time means their will probably Never find a Job as they have little, Outdated Skills