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Unemployment · Part 2 of 3
9 exam-style questions with model answers, plus 14 quick multi-choice questions — every question on this part of the standard, grouped by the 3 pages of notes they come from.
Write a full answer before you reveal the model one. That comparison is where the learning happens.
Name three types of involuntary unemployment and give a New Zealand example of each.
Explain in detail the difference between cyclical and structural unemployment, and why the distinction matters for government policy.
A New Zealand region experiences a rise in unemployment at the same time as a national recession. A large local employer also closes permanently.
Compare and contrast the types of unemployment created by these two events and their impacts, and give a reasoned judgement about which the government should address first.
On the labour market model, explain what each axis shows and why the demand for labour is described as derived demand.
The New Zealand government raises the minimum wage significantly above the market equilibrium wage for low-skilled work.
Explain in detail the impact on that labour market. Refer to the labour market model in your answer.
In the same year, New Zealand experiences a fall in aggregate demand and a large increase in working-age immigration.
Compare and contrast the effect of these two events on the New Zealand labour market, and give a reasoned judgement about the overall effect on unemployment. Refer to the labour market model in your answer.
Explain how unemployment is shown on the production possibility frontier, and explain whether productive capacity has changed.
Explain in detail why an increase in government spending would reduce unemployment more effectively when the economy is deep in a recession than when it is close to full employment. Refer to the AS/AD model and the PPF in your answer.
A prolonged recession causes high unemployment in New Zealand for several years.
Compare and contrast the short-run and long-run effects of this on New Zealand's economy, using the labour market model, the AS/AD model and the production possibility frontier. Give a reasoned judgement about how urgently the government should respond.