Pearson Edexcel International GCSE Economics: Unemployment and its consequences (4EC1) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover point c) of section 2.1.1, low unemployment, in the Pearson Edexcel International GCSE Economics (4EC1) specification, Issue 3. The course is single tier. Calculators may be used and workings should be shown. Every country, region and figure is invented. Read the study guide first if a topic is new, and use the revision notes for recall. Course pages: hub, checklist and free diagnostics.

Questions

1. (a) What is meant by unemployment? [2] (b) State two of the conditions a person must meet to be counted as unemployed under the International Labour Organization (ILO) measure. [2]

2. Country C has a labour force of 12,500 people, of whom 11,750 are in work. Calculate the unemployment rate. [3]

3. In Country D the unemployment rate rises from 4% to 7%. The labour force stays at 2,000,000. (a) Work out how many people are unemployed at 4% and at 7%. [2] (b) By what percentage does the number of unemployed people rise? [2] (c) State the change in the rate in percentage points. [1]

4. State the type of unemployment shown in each case. [4]

• A hotel receptionist laid off each November and rehired each May.
• A weaver whose mill closes after machines take over the work, in a town with no other textile jobs.
• A shop worker who turns down three offers because the pay is below the level she wants.
• A builder made redundant when national spending falls sharply in a recession.

5. Explain why structural unemployment can last a long time. [3]

6. A small town loses 3,000 jobs. Each worker would have produced an average of 18,000 currency units a year. (a) Calculate the output lost in one year. [2] (b) Explain how this is a waste of scarce resources. [2]

7. In Country E, 40,000 more people become unemployed. For each person the benefit paid is 4,800 a year, the income tax lost is 2,500 and the sales tax lost is 450. (a) Calculate the cost to the government of one more unemployed person. [2] (b) Calculate the total cost for all 40,000. [2] (c) Explain why the fall in tax revenue is larger than the income tax lost alone. [3]

8. A household has two earners, paid 2,400 and 1,600 a month after tax. The second earner loses her job and receives a benefit of 700 a month. (a) Calculate the percentage fall in household income. [3] (b) Explain why the risk of poverty rises the longer the spell of unemployment lasts. [3]

9. Analyse how a rise in unemployment can reduce both consumer confidence and business confidence. [6]

10. A farming district (illustrative) has a labour force of 6,000. Unemployed people were: 900 in January to March, 540 in April to June, 180 in July to September and 480 in October to December. (a) Calculate the unemployment rate for January to March. [2] (b) State the type of unemployment shown and give one piece of evidence. [2] (c) Explain why comparing January to March in two different years is more reliable than comparing it with July to September. [2]

11. Describe two ways high unemployment can affect society. [4]

12. Region North has an unemployment rate of 14%, mostly former mill workers who have been out of work for over a year. Region South has a rate of 3%, mostly people between jobs for under three months. Evaluate whether the unemployment in North is more harmful than the unemployment in South. [9]

Answers

1. (a) People who are able and willing to work [1] and looking for work [1] but cannot find a job. [2] (b) Any two of: no paid work in the reference week [1]; available to start work within about two weeks [1]; has looked for work in the last four weeks or so. [2] Examiner insight: A “What is meant by” answer needs two separate parts, so write “able and willing to work” and “cannot find a job” as distinct ideas; “people without a job” is only one part.

2. Unemployed = 12,500 − 11,750 = 750 [1]. Rate = 750 ÷ 12,500 [1] × 100 = 6% [1]. [3] Examiner insight: Write the labour force as the base of the division. Dividing by the whole population would give a different figure, and showing the working lets a marker see which base you used.

3. (a) 4% of 2,000,000 = 80,000 [1]; 7% of 2,000,000 = 140,000 [1]. [2] (b) (140,000 − 80,000) ÷ 80,000 [1] × 100 = 75% [1]. [2] (c) 3 percentage points [1]. [1] Examiner insight: Part (b) asks for a percentage change in the number, which is 75%, and part (c) asks for the change in the rate, which is 3 points. Giving one figure for both is a common way to lose credit.

4. Seasonal [1]; structural [1]; voluntary [1]; cyclical [1]. [4] Examiner insight: A “State” answer should be the type and nothing more. Check the cause given in each case, such as time of year or lack of skills for local jobs, rather than guessing from the word “laid off”.

5. Workers’ skills belong to a declining industry, so they do not match vacancies elsewhere [1]. They must retrain or move to another area, which takes time and money [1]. Until they do, they stay unemployed even when the economy is growing [1]. [3] Examiner insight: “Explain” is a statement followed by two expansion points. Each added step in the chain, from skills mismatch to retraining to length, is a separate point, so a bare statement that it “takes a long time” does not develop the answer.

6. (a) 3,000 × 18,000 [1] = 54,000,000 currency units [1]. [2] (b) Labour is a scarce factor of production that is left unused [1], so the economy produces less than it could and sits inside its production possibility frontier [1]. [2] Examiner insight: State the assumption that unemployed workers would have matched average output. In an explanation, link the idle labour to a lower output than possible, and keep it in terms of the town’s output.

7. (a) 4,800 + 2,500 + 450 [1] = 7,750 [1]. [2] (b) 40,000 × 7,750 [1] = 310,000,000 [1]. [2] (c) Unemployed people earn less, so they pay less income tax [1]. They also spend less, because benefit is below their old wage [1], so less sales tax is collected on what they buy [1]. [3] Examiner insight: Show the three components added together before multiplying, so each step is visible. In part (c), name the second tax and the reason spending falls rather than saying “less tax”.

8. (a) Before = 2,400 + 1,600 = 4,000 [1]. After = 2,400 + 700 = 3,100, so the fall is 900 [1]. 900 ÷ 4,000 × 100 = 22.5% [1]. [3] (b) Benefit is lower than the wage the household lost [1]. Savings are used up as the spell continues [1], so the household can no longer afford basic needs and is more likely to fall into poverty [1]. [3] Examiner insight: In part (a), the percentage is of the original income, not the new income. In part (b), the word “longer” is the point: tie your reasoning to savings running out over time.

9. Consumer confidence: people see others losing jobs and fear for their own [1]. They save more and spend less [1]. Retail sales fall [1]. Business confidence: firms expect weaker demand [1], so they delay investment and hiring [1]. Fewer jobs and less income then reduce spending further, which can make unemployment worse [1]. [6] Examiner insight: “Analyse” asks for an extended chain placed in context. Treat the two kinds of confidence separately, then show how they link back to unemployment, instead of listing effects.

10. (a) 900 ÷ 6,000 [1] × 100 = 15% [1]. [2] (b) Seasonal [1]; evidence: the rate falls to 3% in July to September (180 ÷ 6,000) and rises again to 8% after harvest, a pattern that repeats through the year [1]. [2] (c) The same period each year has similar seasonal demand for labour [1], so any difference reflects a real change in the economy rather than the time of year [1]. [2] Examiner insight: Use figures from the table when asked for evidence. For part (c), say what is held constant (the season) and what that allows you to conclude.

11. Any two effects, each with a development. Effect 1: long spells can cause stress and ill health [1], which lowers quality of life and adds to demand on health services [1]. Effect 2: unemployment concentrated in one region or age group widens inequality between areas [1], leaving communities with less local spending and fewer services [1]. Other creditworthy effects include a rise in crime in some areas, with the development that communities become less safe. [4] Examiner insight: “Describe” asks you to identify a consequence and briefly develop it, so give two different effects, each with one extra step, instead of one effect twice.

12. Reasons North is more harmful (up to 4): the rate is much higher (14% against 3%) [1]; long spells for former mill workers mean skills fade [1]; their income falls to benefit levels for a year or more, so poverty risk is high [1]; there are costs to the government in benefit and lost tax, and weaker spending in the region [1]. Reasons South is less harmful (up to 2): short spells between jobs are normal and let workers find better matches [1]; the costs are small and temporary [1]. Evaluation (up to 3): it depends on how many are affected and for how long [1]; North’s structural unemployment can only ease if workers retrain or move, so the harm continues even if the economy grows [1]; judgement, such as “North’s unemployment is more harmful because of its size, its length and the loss of skills, although South’s has some benefit in matching” [1]. [9] Examiner insight: “Evaluate” requires a supported conclusion. Use both regions, refer to the 14% and 3%, and decide on the factor that matters most, such as how long the spell lasts, so the judgement follows from your reasoning.

Where marks are usually lost

• Using the wrong base: the labour force is employed plus unemployed, not the whole population.
• Confusing percentage change in the number with the change in the rate in points.
• Leaving out the working, when the specification says workings should be given.
• Giving only one part of a definition when two separate parts are needed.
• Naming a type with no link to the cause in the question.
• Writing “less tax” without naming income tax and sales tax and the reason spending falls.
• Listing consequences with no chain from cause to effect.
• Treating the unemployed as if they chose not to work, which fits only the voluntary type.
• Ignoring the data in the question, such as the 14% and 3% in the last question.
• Reaching no conclusion in a question that asks you to evaluate.

Next steps

• Review the revision notes and the study guide.
• Go to the Edexcel IGCSE Economics hub and the printable checklist.
• Take one of the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

Pearson Edexcel International GCSE in Economics (4EC1) specification, Issue 3, February 2026, for first teaching September 2017, published by Pearson Education Limited: section 2.1.1 c), Low unemployment.