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Understanding Unemployment and Its Impacts
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Understanding Unemployment and Its Impacts

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@FlawlessCactus

Questions and Answers

What is the primary reason that the MCD job holder is not considered unemployed by the government?

  • He is enrolled in a retraining program.
  • He is of retirement age.
  • He has a part-time job. (correct)
  • He has a full-time job.

    • Why might retirees be classified differently than retraining individuals by the government?

  • Retirees are accounted for by their age rather than their employment status. (correct)
  • Retirees are automatically registered in job programs.
  • Retirees do not want to work anymore.
  • Retirees are still actively searching for jobs.

    • What is meant by the term 'hidden unemployed'?

  • Officially registered unemployed persons actively looking for jobs.
  • Individuals with part-time jobs who still seek full employment. (correct)
  • Retirees who do not want to work.
  • People who have voluntarily left the workforce.

    • How does the government classify individuals who are enrolled in retraining programs after losing their jobs?

    <p>They are registered as students.</p> Signup and view all the answers

    What aspect can lead to the overestimation of unemployment figures?

    <p>Individuals working in the underground economy.</p> Signup and view all the answers

    What is a common misconception regarding unemployed individuals registered with the government?

    <p>They may be working in unreported sectors.</p> Signup and view all the answers

    What distinguishes the categorization of retraining individuals from retirees in employment statistics?

    <p>Retirees are considered not in the labor force.</p> Signup and view all the answers

    What is one consequence of the government's classification systems regarding employment statistics?

    <p>It makes it difficult to assess true unemployment levels.</p> Signup and view all the answers

    What is a consequence of prolonged unemployment on individuals?

    <p>Decline in physical and mental health</p> Signup and view all the answers

    How does unemployment affect government revenue?

    <p>Decreases corporate profits</p> Signup and view all the answers

    What is a direct effect of an increase in unemployment on economic growth?

    <p>Fall in economic growth</p> Signup and view all the answers

    What is a potential social issue that can arise from rising unemployment?

    <p>Increase in social problems</p> Signup and view all the answers

    What does the natural rate of unemployment refer to?

    <p>The level of unemployment when the economy is at full capacity</p> Signup and view all the answers

    What is an opportunity cost related to higher government spending due to unemployment?

    <p>Investment in infrastructure</p> Signup and view all the answers

    Which type of unemployment is caused by short-term transitions in the labor market?

    <p>Frictional unemployment</p> Signup and view all the answers

    A fall in demand leading to layoffs is primarily associated with which type of unemployment?

    <p>Cyclical unemployment</p> Signup and view all the answers

    What primarily leads to technological unemployment?

    <p>Automation making certain jobs unnecessary</p> Signup and view all the answers

    How does a permanent fall in demand for a particular type of labor occur?

    <p>Changes in consumer tastes and preferences</p> Signup and view all the answers

    What is a consequence of the changing structure of an economy?

    <p>Mismatched skills between unemployed workers and available jobs</p> Signup and view all the answers

    What is one way globalization can affect demand for labor?

    <p>By providing lower-cost foreign labor</p> Signup and view all the answers

    Which factor is least likely to contribute to a fall in demand for certain types of labor?

    <p>Increased investment in education</p> Signup and view all the answers

    What role does technological advancement play in the labor market?

    <p>It can both create and eliminate jobs depending on the sector.</p> Signup and view all the answers

    What primarily causes cyclical unemployment?

    <p>Economic downturns</p> Signup and view all the answers

    What is an example of technological advancement leading to reduced demand for a specific job?

    <p>Automated teller machines decreasing the need for bank tellers</p> Signup and view all the answers

    During a recession, what happens to the aggregate demand curve?

    <p>It shifts to the left</p> Signup and view all the answers

    Which of the following represents a change in consumer taste that might affect employment?

    <p>Shift from cable subscriptions to streaming services</p> Signup and view all the answers

    At equilibrium in the labor market during normal economic conditions, how is the demand for labor represented?

    <p>By the intersection of AD and ASL</p> Signup and view all the answers

    What is the expected change in real wages as firms cut back on production during a recession?

    <p>Real wages decrease</p> Signup and view all the answers

    What is depicted by the movement from Yf to Y1 in the context of a recession?

    <p>An increase in the unemployment rate</p> Signup and view all the answers

    What happens to the quantity demanded for labor when a minimum wage is set above the equilibrium wage?

    <p>It decreases as higher costs lead firms to hire less labor.</p> Signup and view all the answers

    What is a likely outcome of labor unions negotiating for higher wages?

    <p>Higher than equilibrium wages leading to increased unemployment.</p> Signup and view all the answers

    How do employment protection laws affect firms' hiring practices?

    <p>Firms are more cautious and tend to reduce demand for labor.</p> Signup and view all the answers

    What is a consequence of higher minimum wages on the overall supply of goods and services?

    <p>Supply decreases because firms hire less labor.</p> Signup and view all the answers

    Which type of unemployment is considered more harmful?

    <p>Structural unemployment due to its long-term nature.</p> Signup and view all the answers

    What does occupational immobility refer to?

    <p>Lack of education or skills needed for available jobs.</p> Signup and view all the answers

    What would be the effect of geographical immobility on unemployment?

    <p>It increases unemployment as individuals cannot relocate for available jobs.</p> Signup and view all the answers

    How does a rise in the quantity supplied of labor occur following a minimum wage increase?

    <p>Because of greater incentives for workers to enter the workforce.</p> Signup and view all the answers

    Study Notes

    Understanding Unemployment

    • MCD job is viewed as temporary by the individual, who identifies as an unemployed engineer due to lack of work in his field.
    • Government statistics do not count individuals with part-time jobs, like those at MCDs, as unemployed; this creates a "hidden unemployed" group.

    Underestimation of Unemployment Figures

    • Retraining: Individuals retraining after job loss classified as “students” by the government, thus not counted as unemployed, despite wanting to work.
    • Retirees: Those at retirement age not counted as unemployed, even if they desire employment.
    • Shadow Economy: People may be registered as unemployed while engaging in unreported work, skewing statistics.

    Economic Impact of Unemployment

    • Long-term unemployment may lead to increased dejection, lower self-esteem, anxiety, depression, and health issues.
    • Family relationships can suffer, leading to potential break-ups or divorces.
    • Unemployment results in a loss of output; resources are wasted as labor goes unutilized.
    • Lower tax revenue affects government budgets, resulting in increased spending on welfare and social programs.

    Types of Unemployment

    • Frictional Unemployment: Occurs with changes in labor demand, often temporary as workers transition between jobs.
    • Structural Unemployment: A permanent decline in demand for specific labor types caused by:
      • Technological Advances: Automation reduces labor needs in jobs such as banking and airlines.
      • Consumer Taste Changes: Shifts can elevate or reduce the labor demand in various industries.
    • Minimum Wage Laws: Imposing wages higher than equilibrium can lead to increased unemployment due to reduced demand from employers.

    Causes of Structural Unemployment

    • Labour Union Activities: Strikes or negotiations for higher wages can force firms to decrease hiring.
    • Employment Protection Laws: Create hesitation among firms to hire due to high costs associated with firing employees.
    • Occupational and Geographical Immobility: Workers may be unable or unwilling to transition to new job markets or relocate for available positions.

    Cyclical Unemployment

    • Caused by insufficient aggregate demand (AD) often during economic downturns.
    • A contraction in the economy leads to reduced consumer and investment spending, impacting production levels.
    • Lack of demand forces firms to cut back on labor, leading to increased unemployment.

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    Related Documents

    Unemployment (1).pdf

    Description

    This quiz examines the nuances of unemployment, including the hidden unemployed and underreporting in government statistics. Furthermore, it explores the economic and psychological effects of long-term unemployment on individuals and families. Test your knowledge on the various dimensions of unemployment and its broader implications.

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