Government and the Macroeconomy · 4 question types
Past paper frequency (2018 to 2024)
This topic accounts for approximately 14% of your exam marks.
Types of unemployment (cyclical, structural, frictional, seasonal) and policy responses are tested in nearly every Paper 2 series.
Unemployment is the situation in which people of working age who are willing and able to work cannot find a job. The measures how widespread this is in the labour force.
Two parts of the definition examiners always look for.
People not in either group are not counted as unemployed. A retired person is not "unemployed". A student in full-time education is not "unemployed". A "discouraged worker" who has given up looking is technically counted as , not unemployed.
Defining unemployment
What comes up: A 2-mark "Define unemployment" or "What does it mean to be unemployed?" question.
Write (two marks): (1) A person of working age who is willing and able to work (2) and is actively seeking a job but cannot find one.
Watch out: All three elements — willing, able, and actively seeking — must be present. Someone who has stopped looking for work is classed as economically inactive, not unemployed, and would not be counted. Dropping any one of the three conditions will cost the second mark.
This was covered in topic 12 (macroeconomic aims), but the highlights:
Most developed countries aim for an unemployment rate near the natural rate (often around 3–5%). Zero unemployment is neither possible nor desirable, because some frictional unemployment is normal as people move between jobs.