Economics Homework Chapter 5
Short Answer Questions
1)Unemployment means the state of being willing and able to work but not having a job
2)It will decrease the living standards if the increase in inflation is greater than the increase in wage
[Link] purchasing power of their wealth with fall as they can now buyer fewer goods and services
3)Rwanda
4)They could exaggerate a rise in prices if there is quality [Link] example an oven may rise in price by
5% but it could have improved features like a longer [Link] the quality improvements are not adequately
adjusted, inflation measures can overstate the rise in price [Link] could also be substutition
[Link] does not allow substition for certain types of [Link] example air travel and
boat [Link] leads to an overestimation of the cost of living.
5)In the future ,it can increase the labour force because there will be more people who can
[Link], it is only possible if the increase in population have adequate skills or education and
employment opportunities that can sustain rise in human [Link] while they arer still young,
they fall under the economically [Link] the smaller economically active have to work harder
to provide for them.
6)When an economy develops, there will be more job opportunities and higher wage [Link] wage
rates rise higher the price level therfore for the citizens it is possible to afford in the increase in price for
food.
7)The four stages are selecting a base year, survey to find peoples spending patterns,adding weights to
different categories and finding out price changes.
8)The wage rate, job security,working hours ,safety and workforce culture.
9)Labour force survey measure/unemployment rate
10)It is the proportion of the population that is employed or actively seeking work
Homework Essay Questions
a)The labour force partipication rate is the proportion of the population that are of working age and who
are either working or actively seeking [Link] most countries the rate is in between 50% to 70%.There
are factors that can help increase this rate
The first factor that influences the labour force partipication rate is the porportion of woman who
[Link] value varies for different [Link] example in Saudi Arabia 21% of woman work while in
Norway 72% work. This data was collected in [Link] to increase the labour force partipication rate, the
porportion of woman who work must [Link] it may not still be possible in many countries
because of social and cultural factors.
The school leaving age is also a main [Link] the Uk, the school leaving age is 16 while in South Korea it
is [Link] Uk will have a higher labour force participation rate because their school leaving age is younger
so it creates a larger number of individuals who will be available to work.
The retirement age is also a common [Link] governments have decided to raise the age individuals
can gain a state pension so that they can work [Link] will increase the labour force participation
rate.A growing number of governments seek to raise it even further as life expectancy seems to increase.
Migration can also increase the labour force participation rate if they are off working [Link] example an
increase in immigrants in Italy.
Greater training and skills increases workers chances of getting employed and reduces the possibility of
them becoming discouraged workers.A discouraged worker means workers who would like a job but
gave up actively seeking work after a period of trying to find [Link] increase in vocational training can
allow local industries to expand into national markets.
All of these factors can increase the participation [Link] more people work, it can help create many
economic benefits like growth and development
b) Unemployment is the state of being willling and able to work but not have a [Link] unemployment
rate the unemployed workers as a percentage of the labour [Link] of people
unemployed/number of people in labour force x 100
The benefits of of a low unemployment rate is that the government will receive higher tax [Link]
more people are employed, it means the government will experience an increase in the tax [Link]
can even increase the tax [Link] implications allow them to increase their expenditure on public and
merit [Link] will also decrease government expenditure on state benefits because less people are
[Link] can use the finance for more demanding purposes.
If more people are employed, there can be a reduction in mental [Link] people will have a sense
of purpose and pride doing their [Link] that are unemployed will have depression and anxiety
worrying about their finances.A reduction in unempolyment can help reduce crime [Link] people will
undertake illegal activities just to make ends meet.
If more people are employed and have higher incomes, it can increase consumer [Link] will raise
demand for firm's goods and services therefore increases their [Link] increases the GDP of a
[Link] more people work, it reduces the possible of employers expoliting their workers with lower
wages because there is less choice of potential workers in the economy.
The limitations of a low level of [Link] a low unemployment rate does not always show
a sign of a strong [Link] is because some workers will have low-paid or insecure [Link]
workers many experience [Link] is when people are working fewer hours than they
would like or working in jobs they are overqualified [Link] there is frictional or structural unemployment it
may give them the opportunity to search for a job they may enjoy more and which may be better paid.
It is important to find out the reasons for low rate of [Link] example if more people are
employed, then it will be a good [Link], a problem will occur if unemployment was cuased by
discourged [Link] are workers who would like a job but actively gave up seeking work after a
long period of trying to find [Link] any economic benefit especially if working inside production
possibility curve.
Firms will suffer because they will have less choice of potential workers and may end up employing
individuals who are not skilled enough for the [Link] cause further consequences in the [Link]
frictional unemployment, it makes it more diffcult for the economy to respond quickly to changes in
demand and supply conditions by moving workers from declining to expanding industries.
In conclusion a fall in the unemployment rate usually has postive [Link], it is important to
identify the reason for a fall in the unemployment rate and make sure it is not concealing any
underemployment or discouraged [Link] these will have a negative impact on the economy.
Data Response Questions
1)the unemployment rate is unemployed workers as a percentage of the labour force. number of people
unemployed/number of people in the labour force x 100
2) If workers are spending long periods of time in traffic just to get to work and home, it will create an
opportunity [Link] because they could have used this time to produce goods and [Link]
workers spend long periods of time in traffic it reduces their productive time producing less
[Link] may also suffer from mental and physical health issues such as back problems, stress from
being on the road [Link] can lead to reduced productivity.
3)It also increase [Link] hiring becomes cheaper, firms are more willing to employ more
[Link] firms can expand their capacity by increasing their labour [Link] can also increase
economic growth allowing for more jobs to be created and reducing [Link] can
easily adjust workforce to market conditions, making them more [Link] there is an increase in
demand, they can employ more workers
Although,it can also reduce wage [Link] can take advantage of this and threaten workers with
dissmal and lower wage [Link] reduces value of workers income to purchase goods and
[Link] can become insecure of their jobs if they can easily get [Link] can affect their
morale and productivity
4)Unemployment is when an individual is able and willing to work but does not have a job.
In 2007, Brazil had the second highest unemployment rate(10.1%).Venezuela had the highest
unemployment rate which was 10.3%.While Mexico had the lowest unemployment rate 3.6%.Brazil had
a higher unemployment rate compared to Mexico,Chile and [Link] was less compared to
Venezuela.
In 2008, Brazil had an unemployment rate of 8.5%.Although, it did decrease from the previous year ,it
was the country with the highest unemployment [Link] Mexico's unemployment rate was constant
at 3.6% and still was the country with the lowest unemployment rate.
In 2009, Brazil had an unemployment rate of 7.7%.It had decreased and had the second lowest
unemployment [Link], Mexico did increase to 6.3%, it was still the lowest unemployment
[Link] Brazil had an unemployment rate less than Chile, Argentina and Venezuela but still higher
than Mexico
In conclusion, Brazil's unemployment rate decreased and [Link] was especially seen in
[Link] even if it decreased and was lower than most of the other [Link] still had the
lowest unemployment rate for three consective years regardless if it increased in the final [Link]
never had a lower unemployment rate than Mexico.
Essay Questions
a)Labour productivity is the amount of output produced per unit of labour input.
Countries like South Korea and Singapore invest into alot of training and [Link], workers
are more likely to be skilled at their job increasing productivity and [Link] India that does not
invest as much into education, having a lower productivity than compared to Singapore and South Korea.
The health of the population is also a factor for labour [Link] the Uk healthcare is free therefore
more individuals are healthy and can possibly work more efficient with longer [Link] countries that
do not invest as much into healthcare will have individuals being more sick hence being less productive.
Gender equality also acts as an important [Link] more woman work,then it will increase the labour
productivity of a [Link] example in 2020 Norway had 72% of woman [Link] in Saudi
Arabia it was just 21%.Saudi Arabia will have less woman working because of cultural and social beliefs,
hence they will have a lower productivity when compared to Norway.
Even though technology can take the jobs of many people, it can also increase their [Link]
invested in machines to help individuals produce more output in less [Link] countries that don't
invest as much in technology will have a lower productivity since human capital by itself will produce
output slower.
All of these factors and many more influence labour productivity in many different [Link]
some countries have higher or lower labour productivity.
b) The claimant count measure counts as unemployed those who register as unempolyed in order to
claim unemployment benefits.
The labour force survery measure involves conducting a survey asking people if they are employed,
unemployed or economically inactive.
The advantages of the claimant count is that the measure is cheap and very quick to calculate because it
is based on the information that the government collects as it pays out the unemployment
[Link] a labour force survey the claimant count is less likely to be subject to any sampling errors
or pratical problems of data collection as it is based on administrative [Link] claimant count is
updated more frequently hence gives a better representation of the unemployment trends.
The disadvantage is that the figure obtained may not be entirely [Link] is because it will include some
people who are really not unemployed and omit those truly [Link] example some maybe
receiving the benefit without actively looking for a job and others many claim benefits while working
which is [Link] maybe actively seeking employment but do not appear in official [Link]
could be young or too old to claim unemployment [Link] other will decide not to claim benefits
they are entitled too because of pride.
The labour force survey measure advantage is that it will pick up groups not seen in the claimant count
like those that are not receiving unemployment benefits eventhough they do not have a job and seeking
for [Link] is also based on international agreed [Link] example the (ILO) International Labour
Organisation definition of [Link] allows for international comparisons to be made [Link]
allows for more information to be found out such as the qualifications of job seekers and reasons for the
unemployment because they can just ask people
The disadvantage is that it is prone to sampling [Link] example individuals may not be truthful if they
are unemployed or not because of [Link] is more expensive and time-consuming as they are
conducting a survey on a large population, a reason why it is done less frequently compared to the
claimant count. It is also possible for it to experience any sampling errors or practical problems of data
collection because it based on a sample survey.
The labour force survey measure is a more accurate method because it gives an accurate figure of
[Link] will include groups not seen by the claimant [Link], the labour force survey
measure is done less frequently as the claimant count can be done [Link] can give a greater
indication of unemployment [Link] why governments use them together to get a better
understanding of unemployment.
Multiple Choice Questions
1)C
2)D
3)B
4)D
5)D
6)C
7)A
8)A
9)D
10)A