Cambridge International as and a level Economics Ebook

2
Which of the reasons given for the rise in female 
employment would have increased the size of the 
UK’s labour force?
243
Chapter 9: The macroeconomy 

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receiving benefi ts, it changes every time there is a change in 
the rules on who qualifi es for unemployment benefi t.
Th
e more widely used measure involves a 
labour 
force survey
using the International Labour Organization 
defi nition of unemployment. Th
is includes as unemployed 
all people of working age who, in a specifi ed period, are 
without work, but who are available for work in the next 
two weeks and who are seeking paid employment. Th
is 
measure picks up some of the groups not included in the 
claimant count. It also has the advantage that it is based on 
internationally agreed concepts and defi nitions, so makes 
international comparisons easier. More information is found 
on, for example, the qualifi cations job seekers have. However, 
the data are more expensive and time-consuming to collect 
than the claimant count measure. Also, as the data are based 
on a sample survey, they are subject to sampling error and to 
a multitude of practical problems of data collection.
Labour force survey: 
a measure of unemployment based 
on a survey that identifies people who are actively seeking 
a job.
KEY TERM
Policies to correct unemployment
To reduce cyclical unemployment, a government will 
use 
refl ationary fi scal or monetary policy measures
to 
increase aggregate demand. Among the refl ationary fi scal 
policy measures it may use are:
■ 
a reduction in indirect or direct taxation to increase 
consumer expenditure
■ 
a cut in corporate taxes to stimulate investment
■ 
an increase in government spending.
Th
e possible monetary measures include:
■ 
reducing the rate of interest to increase consumer 
expenditure and investment
■ 
increasing the money supply to, again, increase consumer 
expenditure and investment
■ 
lowering the exchange rate, either through a formal 
devaluation or through intervention in the foreign exchange 
market in the case of a managed float, to increase net exports.
Th
e extent to which refl ationary fi scal or monetary 
policy measures increase aggregate demand will depend 
on a number of factors. Th
ese include the size of the