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Economics IGCSEPDF 97
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Question 7.1 (4 Marks)
Explain the difference between
Question 7.2 (6 Marks)
Analyse the main economic consequences of a high rate of
national economy.
Question 7.3 (8 Marks)
Discuss whether cyclical unemployment
unemployment.
cyclical unemployment
cyclical unemployment
structural unemployment.
structural
●
●
●
spending on unemployment
benefits, leading to a budget deficit.
Costs to the Economy: A loss of
potential output (the economy is
operating inside its Production
Possibility Curve, PPC) and reduced
and
is easier for a government to reduce than
for a
Aggregate Demand (AD) due to
lower consumer spending.
● Cyclical Unemployment:
○ K: Caused by a fall in Aggregate Demand (AD) during an economic recession
or downturn.
○ A: It is a temporary lack of demand for labour across the economy.
● Structural Unemployment:
○ K: Caused by a fundamental mismatch of skills between workers and the jobs
available (e.g., decline of a traditional industry).
○ A: It is a long-term problem requiring workers to be retrained or relocate.
K: Cyclical unemployment signifies a severe lack of demand, leading to underutilisation
of resources.
A: The primary consequence is a large loss of potential output (GDP), as the economy
operates inside its Production Possibility Curve (PPC).
Solved Answers (Note Form)
Unsolved Past Paper Questions
Q7.1: Cyclical vs. Structural Unemployment (4 Marks)
Q7.2: Consequences of Cyclical Unemployment (6 Marks)