To be counted as unemployed, a person of working age must be

Out of work and actively seeking it.

In part-time work but wanting more hours.

Out of work and claiming benefits.

Out of work and economically inactive.

The natural rate of unemployment consists of

Structural and frictional unemployment.

All unemployment in the economy.

Cyclical and seasonal unemployment.

Structural and cyclical unemployment.

The Labour Force Survey measure of unemployment is usually higher than the Claimant Count because it

Includes unemployed people who claim no benefits.

Counts people who are not seeking work.

Includes people who are economically inactive.

Uses benefit records rather than a household survey.

A sharp rise in unemployment affects the government's budget position by

Lowering tax revenue and raising welfare spending.

Lowering both tax revenue and welfare spending.

Raising both tax revenue and welfare spending.

Raising tax revenue and lowering welfare spending.

Net migration increases the size of an economy's labour force. Which one of the following best explains why this need not raise unemployment?

Migrants also spend, raising the demand for labour.

Migrants are counted as economically inactive.

Migrants cannot claim unemployment benefits.

The labour force is not used to measure unemployment.

2.3.2 Employment and Unemployment — Practice Questions

Nine original multiple-choice questions on employment and unemployment, written to the style and difficulty of AQA Paper 3 Section A.

9 questions AQA A-Level Multiple choice Model answers included

Not read the notes yet? Start with the 2.3.2 Employment and Unemployment revision notes.

9 questions in this set

1. To be counted as unemployed, a person of working age must be

Definition in context

Select one answer
A In part-time work but wanting more hours.

B Out of work and actively seeking it.

C Out of work and claiming benefits.

D Out of work and economically inactive.
Show model answer
Answer: B (Out of work and actively seeking it.). The unemployed are people of working age who are without work, willing and able to work, and actively seeking it. The searching is what separates the unemployed from the economically inactive: both are out of work, but only the unemployed are looking.

Why the other options are wrong
- A — Someone in part-time work who wants more hours is in employment. They are underemployed, which is a real waste of productive potential but not unemployment.
- C — Claiming benefits is what the Claimant Count measures. Plenty of unemployed people claim nothing, and they are still unemployed.
- D — Economically inactive means not seeking work. The two categories are mutually exclusive by definition.
2. A region's coal mines close permanently, and the miners' skills do not match the jobs available in the industries replacing them. This is best described as

Applied reasoning

Select one answer
A Cyclical unemployment.

B Frictional unemployment.

C Seasonal unemployment.

D Structural unemployment.
Show model answer
Answer: D (Structural unemployment.). Structural unemployment comes from a mismatch between the skills workers have and the skills employers want, usually after a permanent change in the shape of the economy. The jobs exist; the miners cannot do them without retraining, and may be in the wrong place as well.

Why the other options are wrong
- A — Cyclical unemployment is caused by a deficiency of aggregate demand across the whole economy. Here demand has shifted between industries rather than fallen overall.
- B — Frictional unemployment is short-term, while people move between jobs they are qualified for. A skills mismatch is not resolved by a few weeks of searching.
- C — Seasonal unemployment follows predictable annual patterns. A permanent closure is not seasonal.

3. Table 1 describes four unemployed people.
Using Table 1, the person who is frictionally unemployed is

Data interpretation

Table 1: Four unemployed people
Person	Situation
Person 1	A ski instructor with no work until the winter
Person 2	A graduate who left one job last month and is applying for others
Person 3	A steelworker made redundant when the plant closed permanently
Person 4	A factory worker laid off when demand collapsed in a recession

Select one answer

A Person 1.

B Person 2.

C Person 3.

D Person 4.

Show model answer

Answer: B (Person 2.). Frictional unemployment is the short-term joblessness of someone moving between jobs they are qualified to do. Person 2 left one job last month and is applying for another — a normal, brief spell of searching in a working labour market.

Why the other options are wrong

A — Person 1 is seasonally unemployed. The work returns each winter, so the pattern is annual and predictable.
C — Person 3 is structurally unemployed. The plant has closed permanently and their skills no longer match the jobs on offer.
D — Person 4 is cyclically unemployed. The cause is a collapse in aggregate demand during a recession, not a mismatch or a job search.

4. The natural rate of unemployment consists of

Definition in context

Select one answer
A All unemployment in the economy.

B Cyclical and seasonal unemployment.

C Structural and cyclical unemployment.

D Structural and frictional unemployment.
Show model answer
Answer: D (Structural and frictional unemployment.). The natural rate is the unemployment that remains when the economy is at full employment — that is, when there is no deficiency of aggregate demand. What is left is people between jobs (frictional) and people whose skills do not match the vacancies (structural). Neither can be removed entirely, because there will always be job turnover and some mismatch.

Why the other options are wrong
- A — Cyclical unemployment is not part of the natural rate. It is precisely the part that disappears when demand recovers.
- B — Cyclical unemployment is excluded, and seasonal unemployment is not one of the two components the natural rate is defined by.
- C — Structural belongs, but cyclical does not. Swapping frictional for cyclical is the most common version of this error.
5. The Labour Force Survey measure of unemployment is usually higher than the Claimant Count because it

Applied reasoning

Select one answer
A Counts people who are not seeking work.

B Includes people who are economically inactive.

C Includes unemployed people who claim no benefits.

D Uses benefit records rather than a household survey.
Show model answer
Answer: C (Includes unemployed people who claim no benefits.). The Claimant Count only picks up people claiming unemployment-related benefits, so anyone ineligible — or simply not claiming — is invisible to it. The Labour Force Survey asks households directly and counts everyone meeting the ILO criteria, whether they claim or not, so it captures a wider group and comes out higher.

Why the other options are wrong
- A — The LFS requires active job search in the last four weeks. Someone not seeking work is classed as economically inactive by both measures.
- B — The economically inactive are excluded from unemployment on either measure. Including them would not be a difference between the two, it would be an error in both.
- D — This has the two the wrong way round. The Claimant Count is the one built on benefit records; the LFS is the household survey.
6. A qualified engineer working part-time in a shop because no engineering vacancies exist is best described as

Definition in context

Select one answer
A Economically inactive.

B Frictionally unemployed.

C Structurally unemployed.

D Underemployed.
Show model answer
Answer: D (Underemployed.). The engineer is in work, so no measure of unemployment counts them. But their skills are being badly underused and they would work more hours if they could — which is underemployment. It is a genuine waste of productive potential, and it hides inside the employment statistics rather than showing up in the unemployment rate.

Why the other options are wrong
- A — The economically inactive are not working and not looking. This person is working.
- B — Frictional unemployment means being out of work while searching. Again, this person has a job.
- C — There is a skills mismatch here, which is why the term is tempting — but structural unemployment requires being unemployed, and this person is employed.
7. An economy has a labour force of 30 million and 2.1 million people unemployed, of whom 900,000 are cyclically unemployed. To one decimal place, the natural rate of unemployment is

Calculation

Select one answer
A 3.0%

B 4.0%

C 4.3%

D 7.0%
Show model answer
Answer: B (4.0%). The natural rate is the unemployment that would remain at full employment, so the cyclical component has to be stripped out first.
2,100,000 − 900,000 = 1,200,000 frictionally and structurally unemployed.
1,200,000 ÷ 30,000,000 × 100 = 4.0%.
The 900,000 cyclically unemployed would find work again once aggregate demand recovered, which is precisely why they are excluded from the natural rate.

Why the other options are wrong
- A — 3.0% is 900,000 ÷ 30 million, the rate of cyclical unemployment. That is the part the natural rate leaves out, not the natural rate itself.
- C — 4.3% divides by the 27.9 million in employment rather than by the 30 million labour force. The denominator for any unemployment rate is the labour force, which includes the unemployed.
- D — 7.0% is all 2.1 million unemployed over the labour force. That is the economy's actual unemployment rate, which exceeds the natural rate whenever there is cyclical unemployment.
8. A sharp rise in unemployment affects the government's budget position by

Applied reasoning

Select one answer
A Lowering both tax revenue and welfare spending.

B Lowering tax revenue and raising welfare spending.

C Raising both tax revenue and welfare spending.

D Raising tax revenue and lowering welfare spending.
Show model answer
Answer: B (Lowering tax revenue and raising welfare spending.). Both sides of the budget move the wrong way at once. People out of work pay no income tax and spend less, so receipts from income tax and VAT fall. At the same time more people claim unemployment-related benefits, so spending rises.
The deficit therefore widens from both directions, which is why unemployment is expensive for the public finances as well as for the people affected.

Why the other options are wrong
- A — Welfare spending rises rather than falls when more people are out of work and claiming.
- C — Tax revenue falls. Unemployed people pay less income tax and spend less, so VAT receipts drop as well.
- D — Both halves are backwards — this describes what happens when unemployment falls.
9. Net migration increases the size of an economy's labour force. Which one of the following best explains why this need not raise unemployment?

Applied reasoning

Select one answer
A Migrants also spend, raising the demand for labour.

B Migrants are counted as economically inactive.

C Migrants cannot claim unemployment benefits.

D The labour force is not used to measure unemployment.
Show model answer
Answer: A (Migrants also spend, raising the demand for labour.). It is tempting to treat the number of jobs as fixed, so that more workers must mean more unemployment. But migrants are consumers as well as workers: they rent homes, buy food and use services, which raises aggregate demand.
Because the demand for labour is derived from the demand for goods and services, that extra spending creates jobs alongside the extra workers. Migration can also fill shortages in occupations employers struggle to recruit for.

Why the other options are wrong
- B — Migrants who are working or seeking work are in the labour force, not economically inactive. If they were inactive they would not affect the labour force at all.
- C — Eligibility for benefits changes who appears in the Claimant Count. It has no bearing on whether people are actually in work.
- D — The labour force is exactly the denominator of the unemployment rate, so it certainly is used.

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Revision Notes: Employment and Unemployment AQA Past Papers Book a Free Intro Call

1. To be counted as unemployed, a person of working age must be

2. A region's coal mines close permanently, and the miners' skills do not match the jobs available in the industries replacing them. This is best described as

3. Table 1 describes four unemployed people.Using Table 1, the person who is frictionally unemployed is

4. The natural rate of unemployment consists of

5. The Labour Force Survey measure of unemployment is usually higher than the Claimant Count because it

6. A qualified engineer working part-time in a shop because no engineering vacancies exist is best described as

7. An economy has a labour force of 30 million and 2.1 million people unemployed, of whom 900,000 are cyclically unemployed. To one decimal place, the natural rate of unemployment is

8. A sharp rise in unemployment affects the government's budget position by

9. Net migration increases the size of an economy's labour force. Which one of the following best explains why this need not raise unemployment?

Your score

3. Table 1 describes four unemployed people.
Using Table 1, the person who is frictionally unemployed is