CCEA A Level Economics
CCEA A Level Economics AS 2 Unemployment Exam Questions
Free CCEA A Level Economics revision for AS 2 Unemployment: what you need to know, common mistakes and exam-style questions with answers. Covers claimant count and ILO measures, economic inactivity, types and costs of unemployment and policies to reduce it.
Practise AS 2 Unemployment with past papers
Once you have learnt this topic, find the AS 2 Unemployment questions in real CCEA A Level Economics past papers and mark them with the mark scheme. Doing lots of real questions is the quickest way to learn how examiners ask about each idea.
About CCEA A Level Economics AS 2 Unemployment
Unemployment is a central macroeconomic issue in Unit AS 2: Managing the National Economy. You need to define unemployment and measure it using the claimant count and the ILO Labour Force Survey method, and understand the difference between unemployment and economic inactivity. You then explain the types of unemployment: frictional, structural, seasonal and cyclical (demand-deficient), and the costs of unemployment to individuals, firms, government and society. Finally you look at policies to reduce each type. Northern Ireland's relatively high economic inactivity rate makes the inactivity distinction especially relevant. CCEA questions often ask you to match a policy to a type of unemployment and evaluate it.
What you need to know
- Definition Unemployed people are those of working age who are without work, available for work and actively seeking it.
- Claimant count Counts people claiming unemployment-related benefits. It is cheap and quick but excludes those not entitled to claim and changes when benefit rules change.
- ILO measure Based on the Labour Force Survey: people without a job who have looked for work in the past four weeks and can start within two weeks. It is internationally comparable and usually higher than the claimant count.
- Economic inactivity People of working age who are neither in work nor looking for work, such as students, carers, the long-term sick and early retirees. They are not counted as unemployed.
- Types Frictional (between jobs), structural (decline of industries, mismatch of skills or location), seasonal (time of year) and cyclical or demand-deficient (lack of AD in a downturn).
- Costs and policies Costs include lost output, lower tax revenue, higher benefit spending, loss of skills and social problems. Policies include raising AD for cyclical unemployment and supply-side policies such as training and better job information for structural and frictional unemployment.
Common mistakes in AS 2 Unemployment
- Counting economically inactive people as unemployed; they are not looking for work.
- Recommending higher government spending to solve structural unemployment; it needs supply-side measures such as retraining.
- Confusing the claimant count with the ILO measure, or saying they always give the same figure.
- Listing costs of unemployment without saying who bears them.
- Assuming all unemployment can be removed; some frictional unemployment always exists.
Try three AS 2 Unemployment exam-style questions
1. Distinguish between the claimant count and the ILO measure of unemployment. (4 marks)
Show the mark scheme answer
Claimant count measures those claiming unemployment benefits; ILO measure uses a survey of people without work, actively seeking work in the last four weeks and able to start within two weeks; ILO includes those not eligible for benefits; so it is usually higher and internationally comparable.
2. Explain two costs of unemployment to the government. (4 marks)
Show the mark scheme answer
Higher spending on benefits such as Universal Credit, which has an opportunity cost; lower tax revenue from income tax and VAT as incomes and spending fall; so the budget deficit worsens.
3. Evaluate the use of supply-side policies to reduce unemployment in Northern Ireland. (8 marks)
Show the mark scheme answer
Training and education reduce structural unemployment by matching skills to vacancies; improved job information reduces frictional unemployment; incentives to work can draw in inactive people; but time lags and cost; will not help cyclical unemployment caused by weak AD; success depends on demand from employers; conclusion.
AS 2 Unemployment FAQs
What does CCEA A Level Economics AS 2 Unemployment cover?
Measuring unemployment by the claimant count and ILO methods, economic inactivity, the types of unemployment, their costs and the policies used to reduce them.
Which unit is this topic examined in?
It is in Unit AS 2: Managing the National Economy, a 1 hour 30 minute paper with short-answer questions, a case study and an extended response question.
How do I calculate the unemployment rate?
Divide the number unemployed by the labour force (employed plus unemployed) and multiply by 100. Do not divide by the whole working-age population, which includes the inactive.
