IGCSE Development Studies: Specimen Questions with Answers 89 - 90 of 98

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Employment Structure

Question 89 (5 of 7 Based on Passage)

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Why does only final goods and services are included while calculating National income?

Explanation

Only final goods and services are including while calculating National Income because

  • Final goods are those goods which have crossed the boundary line of production and are ready for final consumption and investment.
  • The value of final goods already includes the value of all the intermediate goods that are used in making final goods. This would lead to the problem of double counting if all the goods of the economy will be included while calculating national income.
  • This should be avoided because if the value of ant commodity is counted more than once it will result in overestimation of national income.

Question 90 (6 of 7 Based on Passage)

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What are the different types of unemployment?

Explanation

In general sense, unemployment is a situation in which those who can and willing to work at the prevailing wage rate but do not find a job.

Different Types of Unemployment Are

  • Frictional Unemployment: It occurs when people change jobs, get laid off from their current jobs, take some time to find the right job after they finish their schooling or take time off from working for variety of other reasons.
  • Structural Unemployment: Occurs when workers skills do not match with the jobs that is available. Technological advancements are a cause of structural unemployment.
  • Seasonal Unemployment: Occurs when the industries slow or shut down for a season or make seasonal shifts in their production.
  • Cyclical Unemployment: Unemployment that rises during economic downturns and falls when the economy improves.

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