Economics 2281 · O Level · Employment and unemployment
Employment and unemployment — practice question
A central bank or government can use a number of policy measures to cut unemployment. One option for a government is to raise spending on house construction. The Federal Reserve, which is the central bank of the US, has two principal aims: to keep prices stable and to reach full employment. A few central banks also aim for economic growth, but no central bank sets HDI value as a target.
(a)[2]
Identify two policy measures that a central bank could use to preserve price stability.
(b)[4]
Explain two advantages that full employment brings to an economy.
(c)[6]
Analyse how an increase in government spending on house building could lower unemployment.
(d)[8]
Discuss whether or not a rise in a country’s economic growth rate will increase its HDI value.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme.