Explain why structural unemployment might occur in an economy.

Evaluate government policies to deal with the different types of unemployment.

Answers may include:

• definitions of unemployment and structural unemployment
• diagram to show structural unemployment
• explanation of how structural unemployment might occur
• examples of situations when structural unemployment has occurred.

Marks should be allocated according to the Paper 1 markbands for May 2013 forward, part A.

Answers may include:

• definitions of government policies and frictional, structural, seasonal and cyclical (demand-deficient) unemployment
• diagrams might include AD/AS showing how government policies can increase AD leading to an increase in real GDP and/or a diagram to show how an increase in AD can reduce structural unemployment and the natural rate of unemployment
• explanation that fiscal, monetary or supply-side policies can all be used to reduce the different types of unemployment. Outlining the transmission mechanism involved
• examples of situations where a country has reduced a type of unemployment
• synthesis or evaluation.

Examination may include: the effectiveness of fiscal, monetary and supply-side policies in terms of dealing with the different types of unemployment including the limitations of using demand management to deal with anything other than cyclical unemployment and the suitability of various supply-side policies. In addition, the short-run/long-run implications of using demand management and supply-side policies may be evaluated.

Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.

Opinions or conclusions should be presented clearly and should be supported by appropriate examples.

Marks should be allocated according to the Paper 1 markbands for May 2013 forward, part B.