Eduqas A Level Economics
Eduqas A Level Economics Unemployment Exam Questions
Free Eduqas A Level Economics revision for Unemployment: what you need to know, common mistakes and exam-style questions with answers. Covers measuring unemployment, the claimant count and Labour Force Survey, types and causes, costs and policies to reduce it.
Practise Unemployment with past papers
Once you have learnt this topic, find the Unemployment questions in real Eduqas 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 Eduqas A Level Economics Unemployment
Unemployment is one of the macroeconomic objectives in the Eduqas specification. You need to know how unemployment is measured in the UK (the ILO Labour Force Survey measure and the claimant count), the difference between unemployment and inactivity, and the main types: cyclical (demand deficient), structural, frictional, seasonal and real wage unemployment. You then analyse the costs of unemployment for individuals, firms, government and society, and evaluate demand side and supply side solutions. Links to labour markets, the Phillips curve and supply side policies are important. Examiners reward answers that match the policy to the type of unemployment, using AD/AS or labour market diagrams.
What you need to know
- Measurement The ILO measure (from the Labour Force Survey) counts people without a job who have looked for work in the past four weeks and can start within two weeks. The claimant count counts people claiming unemployment related benefits. The unemployment rate = unemployed / labour force x 100.
- Unemployed versus inactive Economically inactive people are not in work and not looking for work (students, carers, early retired, long-term sick). They are not counted in the labour force.
- Types of unemployment Cyclical (demand deficient) unemployment comes from a fall in AD. Structural unemployment comes from long term changes in industry and a mismatch of skills or location. Frictional unemployment is short term while people move between jobs. Seasonal unemployment follows seasonal patterns. Real wage unemployment occurs when wages are held above equilibrium.
- Costs of unemployment Lost output and income, a fall in tax revenue and higher benefit spending, loss of skills (hysteresis), poorer health and social problems, and wasted resources shown by a point inside the PPF.
- Demand side solutions Expansionary fiscal or monetary policy raises AD and reduces cyclical unemployment, but may cause inflation if the economy is near capacity.
- Supply side solutions Training, education, better job information, reforms to benefits and improved labour mobility reduce structural and frictional unemployment and lower the natural rate.
Common mistakes in Unemployment
- Calculating the unemployment rate as a percentage of the whole population. Divide by the labour force (employed plus unemployed).
- Treating all types of unemployment as needing more demand. Structural unemployment needs supply side policies such as retraining.
- Counting students and retired people as unemployed. They are economically inactive.
- Writing that unemployment only costs the unemployed. Include costs to government finances, firms and society, and long term hysteresis effects.
Try three Unemployment exam-style questions
1. The labour force is 34 million and 1.4 million people are unemployed. Calculate the unemployment rate to one decimal place. (2 marks)
Show the mark scheme answer
1.4 / 34 x 100; = 4.1%.
2. Explain the difference between cyclical and structural unemployment. (4 marks)
Show the mark scheme answer
Cyclical unemployment is caused by a fall in aggregate demand, e.g. in a recession; it falls when the economy recovers; structural unemployment is caused by long term change in the structure of the economy, e.g. decline of an industry; workers lack the skills or are in the wrong location for new jobs, so it persists.
3. Evaluate the use of expansionary fiscal policy to reduce unemployment. (10 marks)
Show the mark scheme answer
A strong answer would show AD shifting right with the multiplier raising output and employment; explain it is effective against cyclical unemployment with spare capacity; evaluate that it does little for structural unemployment, may cause inflation near full capacity, increases borrowing and the national debt, and faces time lags; conclude by matching policy to the type of unemployment.
Unemployment FAQs
What does Eduqas A Level Economics Unemployment cover?
It covers how unemployment is measured, the difference between unemployment and inactivity, the types and causes of unemployment, its costs and the demand side and supply side policies used to reduce it.
Which component is Unemployment examined in?
It can be tested in Components 1 and 2, where data on unemployment rates is common, and it often features in the Macroeconomics essay section of Component 3.
How do I choose the right policy for unemployment?
Identify the type first. Cyclical unemployment calls for higher AD through fiscal or monetary policy, while structural and frictional unemployment call for supply side measures such as training and better labour mobility.
