Macroeconomics (EC108) Problem Set 10a
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Macroeconomics (EC108)
Problem Set 10a
1 The Labour Market
1. “When the economy is in equilibrium in the WS-PS model, there is only voluntary unemployment, because no economic agent has incentives to change their behaviour” . Discuss this statement and whether you agree or disagree, justifying your argument.
2. Read the FT article “UK wages jump but fail to keep pace with inflation”, 17 Jan 2023, and answer the following:
(https://www.ft.com/content/b25fd8d7-f7bd-4501-8a32-21d338846f85).
(a) Explain the UK labour market situation. Why is unemployment rate low even if the UK economy has weakened?
(b) How the return of older workers to the labour force, may affect the UK labour market?
3. Read the FT articles:
● Ambulance workers in England and Wales to go on strike again. 23 Jan 2023 https://www.ft.com/content/657d5c84-3652-4ac9-a4a6-c55392cf07cd
● Nurses in England walk out as industrial disruption hits 30-year high. 17 Jan 2023 https://www.ft.com/content/84019b8e-87bc-4c82-8a09-a4a171c8a5fc
● Teachers in England and Wales vote to strike over pay, 16 Jan 2023 https: //www.ft.com/content/75b0b0ef-d339-4c40-84b9-09e3a1812b36
Answer the following:
(a) What are the main reasons for the strike from the various sectors? (b) How working conditions may affect the decision to strike?
(c) Looking at the news from a different country also dealing with workers’ strike actions, find the reasons for strikes, similarities and differences with the UK current situation.
4. Following an inflation shock, explain what happens to unemployment. Show this in a graph.
2023-06-21