Unemployment, Inflation, Trade

Question 1

Overall trend of unemployment and recent low

Answer 1

generally trending down and almost 50 year low of 3.5% in 2022. suggest natural rate of unemployment is falling, so labour market flexible and better meets needs of firms.

Question 2

Evidence for tight labour market

Answer 2

2022 job vacancies surpassed unemployed people for first time. Firms may increase wages to attract workers, leading to wage price spiral (explain) - especially since inflation expectation may have increased with cost of living crisis.

Question 3

What did inflation peak at and when, and whats it at now

Answer 3

Peaked at 11.1% in 2022 (ONS), fell to target but now starting to creep up again.

Question 4

How did stagflation arise.

Answer 4

Cost push inflation - prices onto consumers but also output reduced due to lower profit margins & demand contraction. A bit of demand pull - post lockdown demand + low production capacity = upwards price pressure.

Question 5

What is primary and secondary income

Answer 5

Primary: flows of interest, profits, dividends
Secondary: transfers such as aid

Question 6

What is the UK the largest net exporter in the world for

Answer 6

Finance services (£87.2 billion)

Question 7

What is the UKs top import and export good and country

Answer 7

Cars (to both!) shows how international trade brings immense choice.
Top export partner is USA and import partner is China.

Question 8

What does OBR suggest the long term reduction in trade with EU will be from Brexit and what country is the UK seeking trade deal with?

Answer 8

15% and USA which may lead to both trade creation and diversion