Questions and Answers
What is a major concern associated with high and prolonged unemployment?
According to the International Labour Organisation, who is considered unemployed?
What is an economic cost of unemployment?
What is a non-economic cost of unemployment?
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What type of unemployment occurs due to a drop in aggregate demand?
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What is a characteristic of structural and technical unemployment?
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What is NOT a limitation of the International Labour Organisation's definition of unemployment?
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What can unemployment insurance payments be utilised for?
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What type of unemployment occurs due to technological changes such as automation?
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Which type of unemployment is a result of people being between jobs temporarily?
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What is the term for the type of unemployment that occurs when people work only during certain times of the year?
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What type of unemployment occurs when people's working hours and salaries are reduced due to poor business performance?
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How can legislation contribute to unemployment?
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What type of unemployment is caused by factors such as minimum wage laws and equal pay for equal work?
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Study Notes
Unemployment: Definition and Costs
- Unemployment is a sign of a malfunctioning economy and causes distressing experiences that can't be quantified.
- According to the International Labour Organisation, unemployment refers to people of working age who are without work, available for work, and have taken specific steps to find work.
Costs of Unemployment
- Economic costs:
- Lost output resulting in potential GDP
- Unemployment insurance payments that could be utilized for other purposes
- Non-economic costs:
- Increased crime and labour unrest
- Despondency and skill rustiness among the unemployed
Types of Unemployment
- Cyclical Unemployment:
- Results from a temporary drop in aggregate demand
- Leads to recession and a drop in real GDP
- Caused by a drop in consumption, government spending, investments, or exports
- Structural and Technical Unemployment:
- Results from a permanent drop in demand
- Can be due to structural changes in an industry or technological changes like automation
- Seasonal Unemployment:
- Occurs when employees only work during certain times of the year
- Disguised/Hidden Unemployment:
- Exists when people have their working hours and salaries reduced due to poor business performance
- Frictional Unemployment:
- A natural, ever-present type of unemployment that occurs even under favourable conditions
- Includes people temporarily between jobs
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Description
Unemployment is a sign of a malfunctioning economy that causes distress and damage. Learn about the definition of unemployment according to the International Labour Organisation.
