stuff

Question 1

structural unemployment

Answer 1

Structural unemployment refers to long run unemployment which occurs as a result of a mismatch of skills between the unemployed and the available jobs in the labour market.

Question 2

reasons for structural unemployment

Answer 2

1)industrial decline/ restructuring
2)labour immobility/education
3)technological progress/automation

Question 3

real wage unemployment

Answer 3

real wages are stuck above the market clearing wage leading to excess supply

Question 4

reasons for real wage unemployment

Answer 4

1)min wage legislation
2)deflation
3)trade union power

Question 5

hysteresis

Answer 5

people become accustomed to lower standards of living and become demotivated to work

Question 6

natural rate of unemployment

Answer 6

the long run equillibrium rate of unemployment which considers all voluntary unemployment as at NRU there is no involuntary unemployment
(frictional/structural/real wage)

Question 7

reasons for NRU

Answer 7

1)mobility of labour
2)education/skills
3)tax and welfare system (incentives)

Question 8

when is the circular flow in equilibrium

Answer 8

planned saving=planned investment and rate of withdrawals=rate of injections or output=expenditure

Question 9

MPC

Answer 9

the proportion of additional income spent on consumption

Question 10

what is the size od the UK multiplier?

Answer 10

1.3<x<1.7

Question 11

SRAS

Answer 11

total output of goods and services produced in the economy

-shows the relationship between planned national output and the price level

-SR assumes prices, technology and productivity are constant

Question 12

LRAS

Answer 12

total amount of production when all resources in an economy are fully employed

Question 13

causes of an LRAS shift

Answer 13

1)technological advancements
2)role of the banking system
3)increase in the long run quantity of FoPs eg discovery of a new resource/increased emigration