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Economics multiple choice questions

A level

Employment / Unemployment

Multiple Choice Questions and Answers

The number of people employed in a country and the level of unemployment both increase. What could make this possible?
A net inward immigration
B a decrease in the level of unemployment benefits
C a decrease in the age at which state pensions are payable
D an increase in the number of students [J08/P3/Q27

➡Answer A

Employment refers to the part of labour force who are actually engaged in some productive activity. In other words, work force refers to the number of persons who are actually employed at a particular point of time in an economy.
What does net inward migration mean? Net migration is the difference between immigration and emigration: the number of people moving to live in a particular country minus the number of people moving out of that country to live elsewhere. If more people are arriving than leaving, net migration is a positive number, which means net immigration.
Net inward immigration results in an increase in both employed and unemployed







The number of people employed in a country and the level of unemployment both decrease. What could explain this?

A net inward immigration
B an increase in the level unemployment benefits
C an increase in the age at which state pensions are payable
D an increase in the number of students [JI2/P3/Q28]

➡Answer D

Employment refers to the part of labour force who are actually engaged in some productive activity. In other words, work force refers to the number of persons who are actually employed at a particular point of time in an economy. Increase in number of students will result in a fall in the country's labour force, therefore will reduce unemployment.








What is most likely to lead to an increase in the natural rate of unemployment?
A more rapid technological and structural change
B a widening in regional wage differentials
C a narrowing in regional house price differentials
D a decrease in trade union membership [N12/P3/Q24]

➡Answer A


The natural rate of unemployment is the unemployment that happens when the economy's production is at the long run level. It is the average rate of unemployment around which the economy fluctuates. The natural rate of unemployment is mainly determined by the economy's productive capacity and it's institutions. Technological and structural unemployment are two different types of NRU.









Which policy is specifically designed to reduce the level of structural unemployment?

A an increase in the level of state benefits paid to the unemployed
B a reduction in interest rates
C a reduction in the level of direct taxation
D the provision of retraining schemes [J13/P3/Q24]

➡Answer D

Structural unemployment is a form of involuntary unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers. Structural unemployment is often brought about by technological changes that make the job skills of many workers obsolete. Therefore workers must be retrained before they join other occupation.









Which type of unemployment occurs when aggregate demand is deficient?

A cyclical unemployment
B regional unemployment
C seasonal unemployment
D structural unemployment [J16/P3/Q23

➡Answer A

Cyclical unemployment is the component of overall unemployment that results directly from cycles of economic upturn and downturn. Economists describe cyclical unemployment as the result of businesses not having enough demand for labor to employ all those who are looking for work at that point within the business cycle.










Why do some economists suggest there may be positive benefits from frictional unemployment?

A A short spell of frictional unemployment may lead workers to become discouraged.
B Frictional unemployment allows time for retraining in newly emerging skills.
C Job search during frictional unemployment may lead to a better match of workers and jobs.
D The psychological effects of frictional unemployment are less than the economic effects. [JI7/P3/Q23]

➡Answer C

Frictional unemployment is a form of unemployment reflecting the gap between someone voluntarily leaving a job and finding another.












What would not be classified as structural unemployment?

A a car worker who is replaced by a robot on the production line
B a coal miner whose mine closes because of increased use of solar power
C a fruit picker who cannot find work in the winter months
D a textile worker whose factory closes as production moves abroad [N17/P3/Q24]

➡Answer C

It is seasonal unemployment. All other options suggest unemployment resulting from structural changes in the economy, therefore they arc examples of structural unemployment.

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