Home / Questions / Adam Smith remarked in The Wealth of Nations’ concerning the balancing of the government b...
Adam Smith remarked in “The Wealth of Nations’ concerning the balancing of the
government budget. “What is prudence in the conduct of every private family can scarce be
folly in that of a great kingdom”
What problems might there be if the government decided to follow a balanced budget
approach to its spending. (10 marks)
Question 2
The country of Eastralia is experiencing the following unemployment:
(i) 1750 seasonal workers harvesting fruit have finished picking for the season.
(ii) 800 motor vehicle workers have been retrenched because employers have decided to
reduce production due to a fall in demand for motor vehicles.
(iii) 250 skilled technicians are unemployed because their electrical mechanical skills have
become redundant as firms have re-equipped with electronically advanced controlled
equipment.
(iv) 150 skilled workers are unemployed as a result of their firm losing an export contract to a
competitor in another country who has recently installed new technologically advanced
production methods.
(v) Because they are convinced that no work exists for them in a depressed economy, 370
people aged over 55 years who are skilled have ceased looking for employment.
(a) What is the number of frictional/seasonal unemployed in Eastralia? (1 mark)
(b) What is the number of structurally unemployed? (1 mark)
(c)What is the number of cyclically unemployed? (2 marks)
(d) What category of unemployed do the people in (v) fit into? (2 marks)
(e)Explain whether or not there is a clear cut distinction between frictional,structural and
cyclical unemployment. (4 marks)
Apr 29 2020 Read more Less More
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