Skip to main content

Table of Contents

  1. Chapter Twenty-Five: Unemployment

Chapter Twenty-Five: Unemployment

1
Question 1

Claimant count unemployment rate measures:

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is b) The number of people claiming unemployment-related benefits as a percentage of workforce jobs plus the claimant count.Your answer has been saved.
Check your answer

2
Question 2

The ILO (or LFS) survey figure for unemployment measures:

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is a) Those who are out of work, want a job, have actively sought work in the last four weeks, and are available to start work in the next two weeks (or have found a job and are waiting to start in the next two weeks) as a percentage of the economically active.Your answer has been saved.
Check your answer

3
Question 3

Which one of the following is not part of the economically active according to ILO definitions?

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is e) Someone who has taken early retirement and is catching up on his/her reading.Your answer has been saved.
Check your answer

4
Question 4

Which of the following statements about types of unemployment is not correct?

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is b) Equilibrium unemployment is made up of cyclical and frictional unemployment.Your answer has been saved.
Check your answer

5
Question 5

The 'replacement ratio' is measured by:

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is d) The size of unemployment benefits relative to the pay of those in work.Your answer has been saved.
Check your answer

6
Question 6

'Hysteresis' means:

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is b) That the equilibrium of the economy may be dependent upon the path that was taken to get there and so is not unique.Your answer has been saved.
Check your answer

7
Question 7

Frictional unemployment arises because:

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is c) Normal turnover of labour in a dynamic economy causes some unemployment to persist on average even if the economy is at potential GDP and the characteristics of jobs available match the characteristics of the workforce.Your answer has been saved.
Check your answer

8
Question 8

Structural unemployment arises because:

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is a) There is an increase in the speed at which the structure of demand for labour is changing or a decrease in the speed at which labour is adjusting to these changes.Your answer has been saved.
Check your answer

9
Question 9

Why may official estimates of unemployment within a country not be a true reflection of the numbers of people who are willing and able to work at the prevailing wage rates?

Hint: re-read 'Measurement and definitions' p568-70, including Box 25.1. Hint

10
Question 10

To what extent would it be fair to say that:

(a) a government will never be able to get frictional unemployment down to zero;
(b) achieving zero frictional unemployment is not a good indicator of a country's economic wellbeing?

Hint: re-read 'Measurement and definitions' pp568.Hint

11
Question 11

What factors have contributed to the changes in unemployment levels in the UK over the last 100 years?

Hint: re-read 'UK experience' pp568-70. Figure 25.1 (p570) provides a visual insight into unemployment trends. You may also wish to skip forward to 'Case Studies 1-3' (pp584-86) and re-acquaint yourself with Chapter 15, pp332-35, Chapter 16 pp358-59 and Chapter 17, Box 17.1 (p394).Hint

12
Question 12

How would you respond to a person who argues that because countries have totally different characteristics and economic experiences, there is very little point in trying to make international comparisons based on unemployment?

Hint: re-read 'International comparisons' pp570-72.Hint

13
Question 13

What are the costs associated with involuntary unemployment? To what extent can these costs be measured?

Hint: re-read 'Consequences of unemployment' p572. In answering the second part of the question, we might focus initially on lost output and the benefits that need to be given to unemployed people. However, you might also want to think about:
(a) how benefits given to the unemployed are financed;
(b) the impact of unemployment on people who are in work;
(c) the depreciation of human capital;
(d) the effect of unemployment on families and self-esteem.

Hint

14
Question 14

Under what circumstances could the level of cyclical unemployment be less than zero?

Hint: re-read 'Cyclical unemployment' p573.Hint

15
Question 15

How do 'New Classical' and 'New Keynesian' explanations of how the labour market operates differ from each other?

Hint: re-read 'The New Classical approach' and 'The New Keynesian agenda' pp 573-78. The respective positions of the two approaches can be found in Figures 25.3 and 25.4 (p574).Hint

16
Question 16

Make a list of the factors that can influence the size of the NAIRU.

Hint: re-read 'Why does the NAIRU change?' pp579-81.Hint

17
Question 17

Explain what is meant by the term 'hysteresis.' In what ways can the government reduce the impact of hysteresis?

Hint: re-read the section 'Hysteresis' p580 and 'Persistence' pp581-82. Hint

18
Question 18

Comment on the following statements.

(a) 'Job sharing is a long-term solution to reducing high unemployment.'
(b) 'The diffusion of new technology should be slowed down in order to preserve jobs.'
(c) 'The European Union should take a proactive policy towards unemployment in member countries by effecting trade barriers that prevent the importing of goods from low wage economies.'

Hint: re-read 'Box 25.2' pp583. Its title 'False trails: what won't cure unemployment' should provide a clue as to how to pitch your response! Hint