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Graph
1
In this case, the fall in confidence is due to a high number of low paying jobs,
because
people are [having] concerns about job security. Britain's unemployment rate fell to 6.0
percent in the three months to August, its lowest since late 2008, but job creation has slowed and
wage growth remains very weak; this shows the attempt at creating more jobs to lower the
unemployment rate. But these jobs are not attractive because not all people are willing and able
to work at any given wage rate; this is called natural or equilibrium unemployment which occurs
when he market is in equilibrium.
Graph 2
Graph
relation
ADL
2 shows the
We
between
(aggregate
demand for
labour),
ASL
Q
Q1
e
(aggregate
supply
for labour)
and LF
(total labour
force).
When the
market
is
at
equilibrium,
the
number of
jobs
match the
number
of
people
looking
for jobs (ASL). There is enough jobs, but people are unwilling or unable to take them (LF)
causing unemployment a-b. This is the case in the UK; there are many unstable jobs, like
working in fast foods, seasonal, underpaying, and people do not feel safe about their job security,
causing lower consumer confidence, and so it is more likely that they will save their money in
banks (a leakage in the circular flow of income) than spend it which in turn lowers the money
supply in the country leading to a number of problem like inflation (sustained increase in the
general level of prices for goods and services) and greater unemployment.
The second part of this article says that the economic growth has slowed to a quarterly
0.7 percent in the July-September period, down from 0.9 percent in the second quarter but still
above the average growth rate. As defined before, economic growth is the increase in real gross
domestic product per capita, GDP being "an aggregate measure of production equal to the sum of
the gross values added of all resident, institutional units engaged in production (plus any taxes,
and minus any subsidies, on products not included in the value of their outputs). 2" It is
reasonable to see that economic growth has slowed due to the lack of consumption due to the
lack of consumer confidence. If such a situation persists in the short term, the quarterly GDP
growth rate may become lesser in comparison to other quarters, but if the consumer confidence
changes i.e. the consumers have securer job positions, they recive informataion that the economy
2 OECD Glossary of Statistical Terms - Gross domestic product (GDP) Definition,
July 1 2002, <http://stats.oecd.org/glossary/detail.asp?ID=1163> (1.3.2015.)
4
Table 1
Bibliography
Books
3 Quarterly National Accounts : Quarterly Growth Rates of real GDP, change over
previous quarter, Mar 1 2015, <http://stats.oecd.org/index.aspx?queryid=350>
(1.3.2015.)
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