Macroeconomic issues (unemployment) Flashcards
(15 cards)
unemployment is defined as..
people who are registered as able available and willing to work but cannot find paid employment
3 types of UNE are…
- frictional
- cyclical
- structural
cyclical unemployment occurs when..
fall in AD
why does fall in AD cause cyclical unemployment
when AD falls, output of production falls thus demand for FOP, including labour, decreases
structural unemployment occurs when…
economy undergoes structural changes due to change in consumer demand and technology
why can’t people work during structural UNE
skills become obsolete and there is a mismatch between what skills the workers possess and what skills are required
frictional unemployment occurs when….
labour is between jobs. when ppl are shifting from one job to another and creates time lags between them
consequence of high unemployment
ON CONSUMERS
UNE causes consumer confidence to fall since willingness to spend declines. ppl rather build up ther savings and AD falls.
rising UNE also causes reduction in PP and decrease in MSOL
consequence of high unemployment
ON FIRMS
UNE causes fall in C and AD, thus business confidence dampens and investment plans are held back hence I falls
consequence of high unemployment
ON GOVT
strain on finances
G must increase to stimulate the economy since given for UNE benefits and incurs opp costs
long term UNE causes…
economic disaster
employers dont consider long term unemployed to be probable candidates for vacancies. WHY?
difficult and costly measures to improve the skills and employability of those people
south africa has a ________ UNE RATE of _________
high, 28%
singapore has a ______ UNE RATE of ________
low, 2% [indicates tight labour market]
factors contributing to SUNE in sg
ageing population thus having more occupational immobility
