UNEMPLOYMENT MACRO-ECONOMICS STUDY UNIT 10
STUDY OBJECTIVES • Identify the various phases of the business cycle. • Use economic indicators to determine the phase of the economy. • Identify the types of unemployment. • Identify policy measures to combat unemployment. • Differentiate between the types of inflation. • Distinguish between the various indexes that are used to measure inflation. • Evaluate economic policy to combat inflation. • Explain the Philips-curve.
UNEMPLOYMENT • Definition of unemployment • Types of unemployment: • Cyclical unemployment • Seasonal unemployment • Structural unemployment • Frictional unemployment • Economic cost of unemployment • Lost production • Demand for consumer and capital goods decrease – therefore income decreases • Personal hardships – social problems • Dietary problems
UNEMPLOYMENT • Measures to combat unemployment: • Show graphically the effects of contractionary and stimulative economic policy • Training and retraining • Public works • Wage or employment subsidies • Lower minimum wages • Information programmes • SMME’s and the informal sector • Regional development programmes • Job creation by the public sector
PHILLIPS CURVE • Relationship between inflation and unemployment • Show graphically • Indicate stagflation – increase in inflation and unemployment on Phillips curve. • Stagflation is when AS-curve shifts to the left on the AD/AS model.