MCQ Questions and Answers:

27. Question: 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

Answer: A

Explanation: Net inward immigration results in an increase in both the number of employed people and the level of unemployment. The increase in the labor force due to immigration can lead to both higher employment and higher unemployment rates.

28. Question: 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 of unemployment benefits
C) An increase in the age at which state pensions are payable
D) An increase in the number of students

Answer: D

Explanation: An increase in the number of students will result in a fall in the country's labor force as students are not considered part of the labor force while studying. This decrease in the labor force can lead to a decrease in both employment and unemployment levels.

29. Question: 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

Answer: A

Explanation: The natural rate of unemployment is affected by various factors, including the rate of technological and structural change. More rapid technological and structural change can lead to an increase in the natural rate of unemployment as workers' skills may become obsolete, leading to longer periods of unemployment during the transition.

30. Question: 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

Answer: D

Explanation: The provision of retraining schemes is specifically designed to reduce the level of structural unemployment. Retraining helps workers acquire new skills and match the demands of the changing job market, reducing the mismatch between skills and job requirements.

31. Question: Which type of unemployment occurs when aggregate demand is deficient?

A) Cyclical unemployment
B) Regional unemployment
C) Seasonal unemployment
D) Structural unemployment

Answer: A

Explanation: Cyclical unemployment occurs when aggregate demand is deficient, leading to a downturn in economic activity and reduced demand for labor. It is also known as demand-deficient unemployment.

32. Question: 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.

Answer: C

Explanation: Some economists suggest that frictional unemployment can have positive benefits because job search during frictional unemployment may lead to a better match of workers and jobs. Workers may take the time to find suitable employment that aligns with their skills and preferences.

33. Question: 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

Answer: C

Explanation: Seasonal unemployment, as described in option C, is not classified as structural unemployment. Structural unemployment arises due to long-term changes in the structure of the economy, such as technological advancements or shifts in production methods. Options A, B, and D are examples of structural unemployment.