Lecture Two - Macroeconomic Issues and Analysis an Overview UNEMPLOYMENT Nature of Unemployment One of the major consequences of fluctuating business

Lecture Two - Macroeconomic Issues and Analysis an Overview...

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Macroeconomic Macroeconomic Issues and Analysis: Issues and Analysis: an Overview an Overview
UNEMPLOYMENT Nature of Unemployment One of the major consequences of fluctuating business activity is the ensuing unemployment Unemployment 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 resigning OUTFLOWS (per period of time) To jobs To outside the labour force People taking new jobs People returning to old jobs who had been temporarily laid off • People who have become disheartened and give up looking for a job • People who have reached retirement age • People who temporarily withdraw from labour force (e.g. to raise a family) • People who emigrate • People who die INFLOWS (per period of time) From jobs From outside the labour force School/college leavers People returning to the labour force (e.g. after raising children) UNEMPLOYMENT UNEMPLOYMENT Flows into and out of unemployment Flows into and out of unemployment
Which one of the following willincrease the level of unemployment? Q20%20%20%20%20%

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