Page 119 - F1 - AB Integrated Workbook STUDENT 2018-19

External analysis – economic factors
9.6 Unemployment
Type
Cyclical
 Due to insufficient aggregate
demand ('demand deficient')
Frictional
 People moving from one job to
another
Structural/technological
 Due to structural changes in
industries (e.g. steel production)
Seasonal
 Due to seasonal nature of industries 
Real wage
 Wages are (artificially) too high
Comments/policies
 Keynesian economists would argue
that need to boost aggregate
demand.
 Monetarists would argue you need
to boost aggregate supply.
 Not necessarily a problem
 Reduce by better information.
 Supply side policies – retraining,
relocation grants, etc.
e.g. demand for fruit pickers
 can create regional economic
problems.
 Market imperfection (e.g. strong
unions)
 reduce union powers and abolish
minimum wage agreements.
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