2023 DP2 Term 1 test review

Open Ended

What is missing from this definition of "unemployment"? Complete the definition by filling in the missing details.

It occurs when people are willing and able to work but are unable to find jobs.

Open Ended

What is missing from this explanation of cyclical unemployment? Complete the analysis by filling in the missing details.

Cyclical unemployment is caused by a fall in AD. When AD falls, the AD curve shifts to the left from AD₀ to AD₁. Real GDP falls from Y₀ to Y₁. Due to the fall in the production of goods and services, there is a fall in the derived demand for labour. Hence, cyclical unemployment arises.

Markers' comments

Most candidates did not define the term "business confidence".

Markers' comments

Some candidates wrote that as AD falls, there is a fall in GPL. Hence, the loss of business confidence is not a significant impact as it causes a fall in inflation. This does not make sense as this analysis suggests that the high inflation leads to a fall in inflation (by causing I to fall)!

Markers' comments

It is heartening to see that a few candidates are able to support whether the loss of business confidence is the most significant impact of high inflation by referring to a country's characteristics.

Draw

Circle the part(s) of the analysis that needs to be changed.