Lesson 4.2.3.2

4.2.3.2 Employment and unemployment Quiz: AQA Economics, Unit 2

20 questions

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Lesson 4.2.3.2, Employment and unemployment: 20 multiple choice questions for the AQA Economics (7136), Unit 2: The national and international economy, written with Revision Ninja.

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The 20 questions

  1. Which measure of UK unemployment counts people claiming unemployment-related benefits?

    • The Labour Force Survey
    • The economic inactivity rate
    • The claimant count
    • The employment rate

  2. Which statement describes the Labour Force Survey (LFS) measure of unemployment?

    • It counts only people who have been out of work for more than a year
    • It is a household survey counting people without work who are available and actively seeking work
    • It counts all people who are not employed, including students and retired people
    • It counts only people receiving unemployment benefit payments, which is the same group that the claimant count measures each month

  3. What is voluntary unemployment?

    • Unemployment that arises because workers are seasonally absent
    • Unemployment caused by a recession that affects all workers
    • Unemployment where a person is unwilling to accept the current wage or conditions of available jobs
    • Unemployment caused by a government decision to close an industry, which leaves workers unable to find any other job at all

  4. What is frictional unemployment?

    • Long-term unemployment caused by the decline of traditional industries, which leaves workers without any realistic prospect of a new job
    • Short-term unemployment arising while people move between jobs or enter the labour market
    • Unemployment that exists only during the winter months
    • Unemployment caused by a fall in total demand for goods

  5. What is structural unemployment?

    • Unemployment that rises and falls with the level of total demand
    • Unemployment caused by a mismatch between the skills of workers and the jobs available, or by the decline of industries
    • Unemployment that exists only while people move between jobs
    • Unemployment that occurs for a few months each year due to seasonal demand, which is caused by changes in the level of total spending

  6. What is seasonal unemployment?

    • Unemployment that results from a permanent fall in the labour force, as people leave work to care for family or retire early
    • Unemployment that arises because demand for labour changes at certain times of the year
    • Unemployment that is caused by a long recession in the economy
    • Unemployment that arises from a change in the exchange rate

  7. What is the natural rate of unemployment?

    • The rate of unemployment that occurs when the economy is at its cyclical peak, when output is above potential and wages are rising fastest
    • The rate of unemployment that is always equal to zero in the long run
    • The rate of unemployment consistent with stable inflation, including frictional and structural unemployment
    • The rate of unemployment measured by the claimant count only

  8. A country has a labour force of 30 million, of whom 28 million are employed. What is the unemployment rate?

    • 93.3 per cent
    • 7.1 per cent
    • 2 per cent
    • 6.7 per cent

  9. Real wage unemployment exists when:

    • Real wages rise faster than productivity, so firms hire more workers, which lowers the number of people looking for jobs in the economy
    • The price level falls, so workers accept lower money wages
    • The real wage is set above the market-clearing level, so labour supply exceeds labour demand
    • Workers choose to leave the labour force to study

  10. Cyclical unemployment is rising as the output gap widens. Which policy is most appropriate to tackle this?

    • Supply-side policy that reduces trade union power
    • Policies that improve information about job vacancies, which would reduce the number of workers who are searching for jobs in a recession
    • Policies that increase the minimum wage in all sectors
    • Expansionary demand-side policy to raise aggregate demand

  11. A factory automates its production, so many workers' skills are no longer needed and they struggle to find new jobs. What type of unemployment is this?

    • Structural unemployment
    • Seasonal unemployment
    • Frictional unemployment
    • Voluntary unemployment

  12. The claimant count falls because of changes to benefit eligibility, while the LFS measure does not fall. What best explains this difference?

    • The claimant count includes everyone in the labour force, so it cannot change while the LFS measure is changing each quarter
    • The LFS is calculated using benefit payments, so it must rise when the claimant count falls
    • The two measures count different groups, so changes to benefit rules affect only the claimant count
    • Both measures are always identical, so the difference must be a data error

  13. Which supply-side cause of unemployment affects the position of the long-run aggregate supply curve?

    • A skills mismatch between workers and available jobs
    • A fall in consumer spending during a recession
    • A temporary fall in demand for holiday accommodation
    • A rise in the number of people between jobs

  14. The labour force is 33 million and there are 1.5 million unemployed. What is the unemployment rate?

    • 1.5 per cent
    • 4.5 per cent
    • 3.3 per cent
    • 5.0 per cent

  15. Which is a consequence of unemployment for individuals?

    • Lower tax payments, which always improve household budgets
    • Better skills and career progression during long periods out of work
    • Loss of income, reduced self-esteem and loss of skills over time
    • Higher pay and greater job security

  16. Why does the appropriate policy to reduce unemployment depend on its cause?

    • Only the claimant count affects policy, so causes do not matter
    • Different causes such as cyclical, structural and frictional need different remedies, such as demand boosts or training
    • Unemployment is always reduced by cutting taxes, whatever its cause
    • All types of unemployment respond identically to a rise in government spending, so one policy tool is enough in every case

  17. Why might the natural rate of unemployment fall over time?

    • A rise in money wages always reduces the natural rate
    • A rise in interest rates reduces the natural rate immediately
    • Supply-side policies such as training and labour market reform reduce structural and frictional unemployment
    • A fall in productivity makes it easier for workers to find jobs, because firms need more staff to keep output at the same level

  18. Why might a negative output gap that lasts a long time lead to permanent losses in the economy's supply side?

    • Unemployment has no effect on aggregate supply in any period
    • Long-term unemployment raises the productive potential of workers who stay in jobs, since employers reward those who keep working
    • Long-term unemployment only affects the price level and never affects output
    • Long-term unemployment causes skills to atrophy, which reduces productive capacity and can shift LRAS left

  19. Evaluate whether a fall in real wages could reduce unemployment in every case.

    • Yes, because lower real wages always raise aggregate demand by more
    • No, because real wages have no effect on the labour market at all
    • Yes, because lower real wages always raise the number of jobs in every sector and so remove unemployment across all regions
    • Not always, because the cause may be a lack of demand or structural change rather than wages being too high

  20. Which of the following is the best evaluation of using the claimant count as the main measure of unemployment?

    • It measures economic activity rather than unemployment
    • It counts all people without a job, including those who are not seeking work and those who have never been available to start work
    • It is always more accurate than the LFS, because it uses official data
    • It may understate unemployment, since some unemployed people do not claim benefits and benefit rules can change the count

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