Economics unit 4 - Unemployment 0.0 / 5 ? EconomicsUnemploymentA2/A-levelAQA Created by: anna_richardsCreated on: 23-02-16 20:05 What are the main causes of unemployment? (5) Frictional, Seasonal, Structural, Classical, Demand-deficient 1 of 17 What is frictional unemployment? Occurs when people are between jobs 2 of 17 What is seasonal unemployment? Occurs from seasonal fluctuation in the demand for labour 3 of 17 What is structural unemployment? Occurs from the decline of certain industries. Workers often do not have the skills required to find a new job 4 of 17 What is classical unemployment? Occurs when the real wage rate is too high 5 of 17 What is demand-deficient unemployment? Occurs when there is a lack of aggregate demand 6 of 17 What are 3 consequences of unemployment? Low standard of living, Waste of human capital, Higher spending on unemployment related benefits 7 of 17 What is the natural rate of unemployment? The difference between those who are able and willing to work and those who want to work 8 of 17 At what point on a graph can the natural rate of unemployment be found? Where the LRPC intersects the unemployment axis on a PC diagram 9 of 17 What are the 5 factors that determine the natural rate of unemployment? Availability of job information, Skills and education, Degree of labour mobility, Flexibility of labour market, Hysteresis 10 of 17 What does the SRPC show? An inverse relationship (trade-off) between the rate of inflation and the rate of unemployment 11 of 17 (LRPC) If workers bid up their wages in nominal terms, what will happen? The economy will move back to the original starting position 12 of 17 (LRPC) If workers bid up their wages in real terms, what will happen? The economy will move horizontal to join the LRPC, and a new SRPC will be drawn 13 of 17 What does NAIRU stand for? Non acceleration inflation rate of unemployment 14 of 17 What are the demand-side policies to reduce unemployment? Increase AD 15 of 17 What are the supply-side policies to reduce unemployment? Increase education/training, Reduce occupation mobility of labour 16 of 17 What are the 2 methods of measuring unemployment? Claiment count, The labour force survey 17 of 17
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