2.5.2 Unemployment

• Unemployment refers to the number of people who are available to work, actively seeking employment, but unable to find jobs
• Unemployment is a key indicator of an economy's health and efficiency.
• Match the type of unemployment with its definition:

  Frictional Unemployment ↔️ Between jobs, seeking new opportunities

  Structural Unemployment ↔️ Mismatch of skills and available jobs

  Cyclical Unemployment ↔️ Due to fluctuations in the business cycle

  Seasonal Unemployment ↔️ Demand fluctuations based on seasons
• Structural unemployment arises from mismatches between available jobs and the skills possessed by the workforce
• Cyclical unemployment is caused by technological changes in the economy.

  False
• Seasonal unemployment occurs when demand for labor fluctuates due to seasonal factors
• The unemployment rate is calculated as the number of unemployed divided by the total population.

  False
• The unemployment rate is calculated as the number of unemployed divided by the total labor force
• Match the method of measuring unemployment with its features:

  Claimant Count ↔️ Number of JSA claimants

  Labour Force Survey ↔️ Quarterly household surveys
• The Claimant Count is easily tracked and provides timely data
• The Claimant Count overestimates actual unemployment.

  False
• The Labour Force Survey offers a broader perspective by capturing those not claiming benefits
• The Labour Force Survey data is more up-to-date than the Claimant Count.

  False
• Match the cause of unemployment with its definition:

  Cyclical Unemployment ↔️ Due to business cycle fluctuations

  Frictional Unemployment ↔️ People between jobs

  Structural Unemployment ↔️ Mismatch of skills and jobs

  Seasonal Unemployment ↔️ Demand fluctuations based on seasons
• Cyclical unemployment arises during economic recessions
• Frictional unemployment is a natural part of a dynamic labor market.
• Structural unemployment results from technological changes or industry shifts
• Seasonal unemployment is primarily affected by government policies.

  False
• Economic consequences of unemployment include a reduction in Gross Domestic Product
• Reduced tax revenues are a social consequence of unemployment.

  False
• Increased government spending on unemployment benefits strains public finances
• Cyclical unemployment is caused by fluctuations in the business cycle
• What is frictional unemployment caused by?

  People between jobs
• Seasonal unemployment is influenced by demand fluctuations based on the seasons
• What is the formula for calculating the unemployment rate?

  $\frac{\text{Number of Unemployed}}{\text{Total Labor Force}} \times 100\%$
• What is the economic consequence of unemployment on GDP?

  Reduction in GDP
• Economic consequences of unemployment lead to reduced productivity
• What is the formula for calculating GDP using the expenditure approach?

  $\text{GDP} =$$\text{C} +$$\text{I} +$$\text{G} +$$(\text{X} - \text{M})$
• What does unemployment measure in an economy?

  Health and efficiency
• Match the type of unemployment with its definition:

  Frictional ↔️ Between jobs

  Structural ↔️ Mismatch of skills and jobs

  Cyclical ↔️ Due to business cycle

  Seasonal ↔️ Demand fluctuates seasonally
• What are the two primary methods for measuring unemployment?

  Claimant Count and Labour Force Survey
• The Claimant Count tends to underestimate actual unemployment.
• The Labour Force Survey is a quarterly survey of households
• What happens to tax revenues when unemployment increases?

  Reduced tax revenues
• Rising unemployment can lead to increased rates of mental health issues and stress.
• What are the two main types of policies used to reduce unemployment?

  Fiscal and supply-side
• Expansionary fiscal policies involve increasing government spending
• Contractionary fiscal policies help manage inflation but can increase unemployment in the short term.
• What is the primary strength of education and training programs as a supply-side policy?

  Improves long-term competitiveness
• Match the supply-side policy with its weakness:

  Education and training programs ↔️ Costly and time-consuming

  Labor market reforms ↔️ Potential exploitation