Unemployment & Employment

The primary measure of unemployment in the UK is based on the

• number of people joining the labour force minus the number of people leaving the labour force.

• number of people not working who are of working age.

• the number of people actively seeking work and available to start work.

• proportion of the population of working age without a job.

Workers are seeking employment but cannot find employment because of widespread low economic activity. Which type of unemployment are these workers experiencing?

• Cyclical

• Structural

• Frictional

• Voluntary

An economy is in recession with price deflation and rising unemployment. All other things being equal, which one of the following combination of policies would be most appropriate in these circumstances?

• Low interest rates, a higher budget deficit and a depreciation of the pound

• Low interest rates, expansion of the money supply and an appreciation of the pound

• Higher government spending, higher taxes and a contraction of the money supply

• Higher government spending, higher interest rates and an appreciation of the pound

The most recent unemployment rate (for September to November) - was what?

• 4%

• 5%

• 6%

• 7%

A country has a slow rate of growth of productivity and rising cyclical unemployment. All other things being equal, which measures are most likely to increase the rate of growth of productivity and reduce cyclical unemployment?

• Increased investment and increased saving

• More government spending on training and a higher exchange rate

• Decreased benefit payments and a lower budget deficit

• Lower taxation on firms and lower interest rates

All other things being equal, if an economy operating at the full employment level of output achieves a more efficient allocation of resources, the most likely outcome is that national income per head

• will rise in real terms.

• remains constant because of full employment.

• will fall in real terms because of demand-pull inflation.

• will be redistributed more equitably.

Structural unemployment is most likely to occur because of

• labour being temporarily unemployed when moving between jobs.

• fluctuations in the level of aggregate demand.

• the seasonal nature of certain occupations.

• long-term changes in the pattern of demand for the products of particular industries.

A government wishing to reduce the level of unemployment through the use of fiscal policy would be most likely to

• lower interest rates.

• decrease the size of the budget surplus.

• increase the money supply.

• encourage a depreciation of the exchange rate.

‘Unemployment has begun to rise in the UK. What should policy makers do? Already the Bank of England has cut interest rates. Also, the government has begun to spend more without covering all of the increase by a rise in taxes.’It can be inferred from the data that in response to rising unemployment

• both monetary policy and fiscal policy are expansionary.

• monetary policy is expansionary whilst fiscal policy is contractionary.

• monetary policy is contractionary whilst fiscal policy is expansionary.

• both monetary policy and fiscal policy are contractionary.

Which one of the following types of unemployment is best defined as ‘unemployment for short lengths of time between jobs’?

• Frictional

• Seasonal

• Cyclical

• Structural