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MacroeconomicMacroeconomicIssues and Analysis:Issues and Analysis:an Overviewan Overview
UNEMPLOYMENTNature of UnemploymentOne of the major consequences of fluctuating business activity is the ensuing unemploymentUnemployment has many costs (i.e. human suffering, loss of dignity, loss of output and savings, rise in crime and social vices etc.)Unemployment is considered to be a social evil that must be kept at an “acceptable” level
Measuring Unemploymentunemployment rateisthe number unemployed expressed as a percentage of the labour force.Thus, if 25 million people were employed and 1.5 million people were unemployed, the unemployment rate would be:
If there are 3 million people unemployedand 24 million people employed,the rate of unemployment will be:Q20%20%20%20%20%
• People made redundant• People sacked• People temporarily laid off• People resigningOUTFLOWS(per period of time)To jobsTo outside thelabour force•People taking new jobs•People returning to oldjobs who had beentemporarily laid off• People who have become disheartenedand give up looking for a job• People who have reached retirement age• People who temporarily withdraw fromlabour force (e.g. to raise a family)• People who emigrate• People who dieINFLOWS(per period of time)From jobsFrom outside the labour force•School/college leavers•People returning to thelabour force (e.g. afterraising children)UNEMPLOYMENTUNEMPLOYMENTFlows into and out of unemploymentFlows into and out of unemployment
Which one of the following willincrease the level of unemployment? Q20%20%20%20%20%