Unemployment

Question 1

What may decrease demand-deficient unemployment?

Accepted Answer

lowering taxes, increasing government spending, increasing the money supply in the economy, decreasing interest rates

Question 2

When does disequilibrium unemployment occur?

Accepted Answer

when the labour market is prevented form "clearing"

Question 3

What causes demand-deficient unemployment?

Accepted Answer

declining or low AD, cyclical downturns in the economy

Question 4

What are some of the consequences of unemployment?

Accepted Answer

more unequal distribution of income, increased homelessness and stress levels, loss of tax revenue for the government

Question 5

What are the strengths of monetary policy when fighting unemployment?

Accepted Answer

central bank is quite independent, incremental adjustments of interest rates, no crowding out, quick implementation

Question 6

What decreases the real-wage unemployment?

Accepted Answer

decreasing the minimum wage, reducing the power of labour unions, abolishing the minimum wage

Question 7

Unemployment refers to...

Accepted Answer

jobless people of working age who seek employment

Question 8

Which are the most effective solutions to frictional and seasonal unemployment?

Accepted Answer

lower unemployment benefits, improved flow of information about available jobs

Question 9

Unemployment rate might be underestimated because of...

Accepted Answer

hidden unemployment, part-time workers, difficulties in measuring unemployment

Question 10

Which are types of equilibrium unemployment?

Accepted Answer

seasonal, structural, frictional

Question 11

Which type of disequilibrium unemployment is shown on the diagram between points a and b?

Accepted Answer

classical unemployment, real-wage unemployment

Question 12

Which policies decrease the unemployment rate?

Accepted Answer

automatic stabilizers, demand-side policies, supply-side policies, all of the above

Question 13

Which type of unemployment is shown on the diagram?

Accepted Answer

equilibrium unemployment

Question 14

Which policies are effective in decreasing structural unemployment?

Accepted Answer

interventionist supply-side policies, market-based supply-side policies

Question 15

What kind of interventionist supply-side policies decrease structural unemployment?

Accepted Answer

subsidies for firms which provide training to new workers, the ones which enhance people's occupational mobility, apprenticeships and adult retraining programmes

Question 16

What kind of market-based supply-side policies decrease structural unemployment?

Accepted Answer

more lenient hiring and firing laws, reducing unemployment benefits

Question 17

What are the weaknesses of fiscal policy when fighting unemployment?

Accepted Answer

inability to fine-tune the economy, time lags, crowding out, political constraints

Question 18

What are the strengths of fiscal policy when fighting unemployment?

Accepted Answer

direct impact of government spending on the AD, pulling the economy out of recession

Unemployment

Questions 18

Unemployment

Questions 18