LS9 - Unemployment & Balance Of Payments

Question 1

Frictional Unemployment

Answer 1

When people are ‘between jobs’, this can happen when the economy is at full employment and can be prevented by improving information for employers with vacancies and job applicants.

Question 2

Seasonal Unemployment

Answer 2

When changes in season reduce job availability e.g. tourism, this can be prevented industries diversifying their goods and services and employees in affected sectors to be retrained to compete for jobs in sectors unaffected by reasons.

Question 3

Structural Unemployment

Answer 3

Caused by changes in the structure of the economy over time e.g. reduction in manufacturing, this can be prevented by the government providing subsidies to employers in regions with high levels of unemployment, governments can also help retrain workers,

Question 4

Occupational Mobility

Answer 4

The ability or willingness of workers to move between jobs.

Question 5

Geographical Mobility

Answer 5

The ability or willingness of workers to move between regions.

Question 6

Regional Unemployment

Answer 6

Where there are high levels of unemployment located in specific areas where there’s been a concentration of industries that have declined, this can be prevented by the government offering regional aid including incentives for new industry to relocate to affected areas.

Question 7

Technological Unemployment

Answer 7

Firms substitute technology for unskilled/semi-skilled labour, this can be prevented by affected workers retraining and seeking new jobs.

Question 8

Cyclical/Demand Deficient Unemployment

Answer 8

Caused by low levels of AD when the economy is in recession which leads to reduced demand for labour, this can be prevented by the government boosting the level of AD in the economy.

Question 9

Real Wage Unemployment

Answer 9

When wages are artificially set above the equilibrium level causing the supply of labour to be greater than the demand.