CIE IGCSE Topical Past Paper 2
4.7 Employment and unemployment
0455/22/M/J/24
South America is a large geographical area with millions of microeconomic decision-makers. During a recent pandemic, schools stayed closed for longer than anywhere else in the world. As a result, students received less education. The World Bank estimated that the average student would earn $24,000 less over their lifetime. Some students may earn only the minimum wage. In 2020, South America had an inflation rate of 6.3% and an economic growth rate of only 1.8%.
c) Analyse how the introduction of a minimum wage could affect unemployment. [6]
0455/22/F/M/24
New Zealand is a high-income country with a low unemployment rate and a surplus of imports over exports. Recently, its government has made some important economic decisions. In 2022, it banned everyone born after 2008 from buying cigarettes. A year before, it gave permission for firms to explore for oil in the country.
a) Define unemployment rate. [2]
0455/22/O/N/23
In 2020, some firms in Suriname, a South American country, stopped production. This was because the firms could not cover their variable costs, as well as some of their fixed costs. The reduction in the country’s output resulted in a rise in its unemployment rate. The government used supply-side policy measures to reduce unemployment. In 2021, the number of firms in some markets fell again, but this time it was when output was rising.
b) Explain two types of unemployment. [4]
c) Analyse how supply-side policy measures could reduce unemployment. [6]
0455/22/M/J/23
Canada’s private sector firms have a number of different objectives. The quantity and quality of land used by these firms, including farms, has increased. There has also been increased investment with the firms buying more capital goods. In 2021, the Canadian government encouraged higher investment and aimed to prevent a rise in unemployment.
c) Analyse how an increase in investment may affect unemployment. [6]
d) Discuss whether or not a government should try to prevent a rise in unemployment. [8]
0455/21/M/J/23
In Greece, rich households spend more than the average household. The amount of spending in an economy influences whether its production point is on or inside its production possibility curve (PPC). In 2020, household spending in Greece fell. This affected some firms’ plans to merge. It also increased unemployment. More than half of those unemployed in Greece had been unemployed for more than a year.
c) Analyse why someone who has been unemployed for more than a year may not get another job. [6]
0455/21/M/J/23
Germany’s death rate is higher than some other countries, including Sweden, Cuba and the Maldives. Germany’s labour force increased in size between 2011 and 2021 and has become even more productive. The country has also experienced low inflation and a growing surplus on the current account of its balance of payments.
b) Explain two causes of an increase in the size of a country’s labour force. [4]
0455/23/O/N/22
Romania’s indirect tax rate was 19% between 2017 and 2019. There is a high proportion of foreign multinational companies (MNCs), especially US MNCs, in Romania. MNCs have helped to increase productivity in Romania and lower its unemployment rate. There are also benefits of MNCs to their home countries.
c) Analyse how an increase in productivity can affect unemployment. [6]
0455/22/O/N/22
In 2019, Russia had an unemployment rate of 4.6%. Russia experienced full employment in the past. Its government wants unemployment to be lower. In 2018, the Russian government cut its spending which may have increased poverty. In both 2018 and 2019, the government did not change its income tax rate. Russia operates a proportional tax rate system.
a) Define full employment. [2]
b) Discuss whether or not a fall in a country’s unemployment rate always benefits workers. [8]
0455/21/O/N/22
Bulgaria is part of the European Union (EU), but it has much lower corporation tax rates than other EU members. However, regulation by the Bulgarian government has discouraged foreign investment into Bulgaria. In addition, Bulgaria’s economic growth rate has decreased in recent years, due in part to a steady fall in its quantity of labour.
b) Explain two causes of a fall in the quantity of labour in a country. [4]
0455/21/O/N/22
Medan is the third largest city in Indonesia by population. It is sometimes known as the city of a million shop-houses as many people start small firms at the street level of their homes. This has led to an increase in the market supply of industries such as cafes and clothes shops. Also, due to the growth in demand for food delivery, the unemployment rate has fallen. However, mobility of labour is limited both within Medan and within Indonesia.
d) Discuss whether or not a reduction in the unemployment rate benefits an economy. [8]
0455/23/M/J/21
Cyclical unemployment is below the national average in some big cities in Canada such as Toronto, Vancouver, and Montreal. This could be a result of higher government spending and tax cuts in big cities. However, productivity is low. There are also concerns that structural unemployment may increase as some industries cannot compete with more efficient foreign firms.
a) Define structural unemployment. [2]
c) Analyse how higher government spending and tax cuts can lead to a fall in cyclical unemployment. [6]
0455/22/M/J/21
Turkey’s birth rate is falling which is likely to reduce its supply of labour. However, improvements in the quality of labour and the increase in foreign multinational companies (MNCs) operating in Turkey (the host country to the MNCs) may help the economy avoid a recession. One reason why economists are worried that a recession may occur is an expected rise in the interest rate.
b) Explain two causes of an increase in the quality of labour in a country. [4]
0455/22/M/J/21
Nearly one million people in Cairo, the capital city of Egypt, live in crowded, unhealthy housing. One reason why people lack basic necessities, including adequate housing, is unemployment. In 2019, nearly 10% of Cairo’s workers did not have a job. Other citizens of Cairo live in luxury, in houses costing more than $1 million. Many of Cairo’s rich adults grew up in rich families.
b) Explain how frictional unemployment differs from cyclical unemployment. [4]
0455/22/F/M/22
Botswana’s net migration varies. In 2019, Botswana had net immigration. Since 2010, its unemployment rate has averaged 18%. Between 2010 and 2019, the number of women in the labour force increased from 380000 to 490000. Although Botswana is one of Africa’s richer countries, its households do not save much of their income.
b) Explain two consequences of unemployment. [4]
c) Analyse why more women may join a country’s labour force. [6]
0455/22/F/M/22
South Africa (SA) experienced a recession in the second half of 2019 and an unemployment rate of 29%. Only a small proportion of this unemployment was frictional. South Africa’s foreign exchange rate fell from 1 SA rand = US$0.08 in 2018 to 1 SA rand = US$0.06 in 2019. South Africa had reduced import tariffs, but in 2019 some South African economists suggested tariffs should be used to protect its infant industries.
a) Define frictional unemployment. [2]
0455/21/M/J/21
In 2018, the US had its lowest unemployment rate for 18 years. Cyclical unemployment was very low and so was the rate of inflation. The US also experienced a rise in labour productivity. However, it did not do so well in reducing poverty. In 2018, approximately 12% of Americans were living in poverty.
a) Define cyclical unemployment. [2]
0455/21/M/J/20
Economists are uncertain about the future United States (US) macroeconomic performance. For instance, in recent years, US unemployment has fallen while the deficit on the current account of the balance of payments has fluctuated. Whether its current account deficit will rise or fall in the future may be affected by proposed tax cuts. Some economists suggest that the US government should not be concerned about the country’s current account deficit.
b) Explain two consequences to firms of unemployment. [4]
0455/21/M/J/20
Economists are uncertain about the future United States (US) macroeconomic performance. For instance, in recent years, US unemployment has fallen while the deficit on the current account of the balance of payments has fluctuated. Whether its current account deficit will rise or fall in the future may be affected by proposed tax cuts. Some economists suggest that the US government should not be concerned about the country’s current account deficit.
b) Explain two consequences to firms of unemployment. [4]
0455/22/F/M/19
Average life expectancy is as short for the poorest Americans as it is for the people of Sudan, a low-income African country. Low-income individuals tend to live longest in countries with more educated populations. Economic growth can increase education and reduce poverty. In 2017, the US President announced a cut in the tax on firms’ profits. He said the measure would increase employment.
d) Discuss whether or not a cut in the tax on firms’ profits will increase employment. [8]
0455/21/O/N/18
During a recent recession in Europe, Spain had an unemployment rate of over 25%. This led to high levels of emigration from Spain into higher-wage European economies such as Germany and the UK. This has created both opportunities and problems in countries where immigration was higher than emigration.
a) Define unemployment. [2]
c) Analyse how a recession in one country could cause unemployment in another country. [6]
0455/23/M/J/18
In 2016, the trade union representing doctors in the UK was involved in collective bargaining with the government over proposed changes to doctors’ contracts. The trade union considered that the aim of the changes was to reduce the cost to the government of providing healthcare. It may also result in fewer individuals training to become doctors in the future.
c) Analyse the impact of a reduction in government expenditure on healthcare on a country’s unemployment rate. [6]
0455/22/F/M/18
Taxi drivers usually have to buy a licence to carry passengers. The relatively high fixed cost of the licence discourages some people from becoming taxi drivers. Encouraging more people to be taxi drivers would be likely to reduce taxi fares and unemployment. It may, however, increase traffic congestion.
Discuss whether or not a reduction in unemployment always increases living standards. [8]