1. COSTS AND BENEFITS OF ECONOMIC GROWTH
REVIEW 4.3
COSTS AND BENEFITS OF ECONOMIC GROWTH

2. BENEFITS A rise in material living standards
A rise in the welfare of the population
A rise in employment
A reduction in poverty

3. COSTS OF ECONOMIC GROWTH
Environmental costs
Congestion
Loss of non-renewable resources
A lower quality of life
Inequalities of income and wealth
Inflation

4. EMPLOYMENT/UNEMPLOYMENT
REVIEW 4.4
EMPLOYMENT/UNEMPLOYMENT

5. Full employment – When all those able and willing to work are in paid employment at the current wage rates.
Unemployment – When workers who are able and willing to work are unable to find employment (at the current wage rates)
Full employment may also be the lowest value before inflation starts to accelerate. (NAIRU = Non accelerating Inflation Rate of Unemployment)
Unemployment Inflation
3 million %
2 million %
1 million %
0.5 million % - NAIRU
.25 million %

6. Measuring Unemployment
1. Claimant Count – Measures unemployment according to the number of people claiming unemployment – related benefits.
2. Labour Force Survey – A survey of a sample of households, counting people as unemployed if they are actively seeking work but do not have a job.
WHAT ARE THE TYPES OF UNEMPLOYMENT?
1. Voluntary Structural (most serious)
2. Seasonal Technological
3. Frictional Cyclical

7. Cures
1. Voluntary – reduce benefits and/or raise minimum wage.
2. Seasonal- Improve mobility of workers
3. Frictional – None
4. Structural – Re training
5. Technological – Embrace new technology
6. Cyclical – Wait for the ‘boon’ to return.

8. What are the consequences of unemployment?
Labour resources are wasted
Lower living standards
Excluded workers
Costs to tax payers
A budget deficit
Regional problems
Social problems
How the government fixes unemployment
1. Fiscal
2. Interest Rates
3. Supply side