Low Unemployment
Macroeconomic Objectives
Syllabus requirement
Measurement, causes (structural, frictional, seasonal), natural rate of unemployment, and economic/social costs.
Summary
This section explains what unemployment is, how it is measured, why low unemployment matters, and the difficulties in obtaining accurate figures. It covers real wage unemployment via a minimum wage diagram, the unemployment rate and labour force definitions, the ILO and claimant count measures, hidden and voluntary unemployment, underemployment, and disparities. It also introduces cyclical (demand-deficient) unemployment and shows it using AD–AS analysis and a deflationary gap. Understanding these ideas helps analyse policy choices for achieving the macroeconomic objective of low unemployment.
