2019 Nov (Unemployment/ Phillips Curve) Paper 3 HL

2019 Nov (Unemployment Phillips Curve) 

Paper 3 HL

The NRU (natural rate of unemployment) is the unemployment level at which the LRPC (long-run Phillips curve) is vertical and  that it consists of structural, (seasonal) and frictional unemployment.

2019 Nov (Unemployment, Inflation) Paper 3 HL

2019 Nov (Unemployment, Inflation) Paper 3 HL

To find a Rate of Change

(New – Old)/Old x 100

 

2014

(102.51 – 100.55) / 100.55 x 100

1.96/100.55 x 100

.01949 x 100

1.949 then round up = 1.95

 

2015

(107.52 – 102.51)/ 102.51 x 100

5.01 / 102.51 x 100

.04887 x 100

4.887 then round up = 4.89

2012

Unemployed + Employed = Labor Force

.99 + 12.50 = 13.49 (Labor Force)

Unemployed / Labor force x 100 = Unemployment Rate

.99/13.49 x 100

.07338 x 100 = 7.338 Then round up = 7.34 Unemployment Rate (2012)

 

2013

Unemployed + Employed = Labor Force

.71 + 12.60 = 13.31 (Labor Force)

Unemployed / Labor force x 100 = Unemployment Rate

.71/ 13.31 x 100

.5334 x 100 = 5.334 Then round down = 5.33 Unemployment Rate (2013)

 

 

·      Investment Spending – As companies can predict future revenues and costs with less uncertainty/more confidence there are higher levels of investment spending.

·      Export Competitiveness – as PL (price levels) doesn’t change export sells are more competitive so trade deficits do not widen creating BOP (balance of payment) problems/ export-driven growth is maintained.

·      Income Inequality Stability – money wage earners and recipients of transfer payments do not suffer a decrease in their purchasing power as they usually cannot negotiate higher wages/payments (income inequality doesn’t widen).

·      Price Mechanism Efficiency – efficiency of the price mechanism is maintained permitting efficient allocation of resources.

·      Lenders Loss – so income is not redistributed from lenders to borrowers, so that lenders (banks) do not charge unnecessarily high interest rates/ so that borrowing  is not excessively encouraged.

·      Borrowers Loss – so income is not redistributed from consumers to other groups such as banks, shareholders or producers who would benefit from higher profits (or so income inequality does not widen)

·      Currency Depreciation – which leads to higher import prices and production costs.

·      Deflationary Spiral – prices and profits keep falling.

·      Deflationary Gap – decrease in economic activity and higher unemployment or bankruptcies.

 

2019 May (Unemployment, Price Floor, Minimum Wage) Paper 3 HL

2019 May

 (Unemployment, Price Floor, Minimum Wage) Paper 3 HL

(a)  Calculate the unemployment rate in Fairland using Table 1.

 = 26.57% or 26.69%

(b)  Outline 2 difficulties in measuring unemployment.

·Discouraged workers/Hidden Unemployment – some people who are able and willing to work have become discouraged and have given up looking for work.

·Underemployed – do not full utilize their time (involuntary part-time workers) skills/experience.

·Unemployment Fraud – Claims by those who seek to obtain unemployment benefits, or those in the informal labor market seeking to avoid tax that distort the official unemployment statistics.

·Unemployment Averaging – the unemployment figure is an average and ignores regional, ethnic, age, and gender disparities.

 

(c)  Draw and label a curve that illustrates Fairland’s minimum wage on figure 6.

(a)  Calculate the resulting unemployment among low-wage workers.

At a minimum wage (price floor) of $10

Only 14m workers will be employed while 40m will supply their labor

Therefore there will be a surplus of workers of 26m = 40m – 14m

Surplus workers means – unemployed workers.