Unemployment

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A2 economics Flashcards on Unemployment, created by jack.miers on 01/04/2014.
jack.miers
Flashcards by jack.miers, updated more than 1 year ago
jack.miers
Created by jack.miers over 10 years ago
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Question Answer
Unemployment Def: Those who are willing and able to work, but unable to find a job.
Method of measuring unemployment: Labour force survey, 2.51million people approx.
Types of unemployment: - Seasonal - Frictional - Structural - Cyclical - Real wage - Technical
Seasonal unemployment: Tourism, farming, building- People unemployed when demand falls during seasons
Frictional unemployment: Between jobs- e.g new graduates looking for work or leaving one job to get another.
Structural unemployment: When whole industries collapse- e.g ship building industry in britain Etc.
Cyclical unemployment: the Ups and downs of the economic cycle...--> HENCE CYCLICAL
Real wage unemployment: Wage set above the equilibrium rate- e.g national minimum wage, or trade unions.
Technical unemployment: When people are replaced by machines in order to increase efficiency.
policies to reduce unemployment: --> The new deal was introduced in order to tackle frictional + structural unemployment. --> Increasing AD by lowering taxes and interest rates in order to tackle Cyclical unemployment. --> Increasing efficiency of job centres. --> Improve incentives for the unemployed to work ( lower income tax) --> encourage foreighn direct investment/ FDI in order to help tackle strucutural unemployment ( toyota investing in car industry)
Consequences of unemployment (BAD) -->gov has to pay out benefits --> tax revenue overall is reduced --> gov not reciving tax income or NI contributions --> economy not working to its full potential --> higher crime, more mental health problems --> reduces both consumer and business confidence --> increase in income inequality
consequences of unemployment: (GOOD) --> greater pool of resources to choose from --> lower inflation --> companies selling inferior goods, do well.
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