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your
best
to
answer
the
questions
on
each
page
and
then
check
your
answer.
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you
need
to,
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the
question
again
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get
a
closer
match.
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ready.
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Question
1
Define
Aggregate
Demand
and
its
components.
Check
answer.
Aggregate
Demand
=
The
demand
for
all
goods
and
services
produced
in
the
NZ
economy
in
one
year.
AD
=
GDP
=
Y
=
AD
=
C
I
G
(X-M)
-
Consumption
-
the
spending
on
all
goods
and
services
by
households.
-
Investment
-
the
buying
of
capital
goods
by
firms.
-
Government
spending
on
public
and
private
goods
and
services.
-
Net
exports
-
Export
receipts
minus
import
payments.
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Question.
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Question
2
Define
both
Recessionary
Gap
and
Inflationary
Gap.
Check
answer.
Recessionary
Gap
=
Where
the
equilibrium
point
of
AD
=
AS
is
below
the
full
employment
line.
There
is
unemployment
in
the
economy.
Inflationary
Gap
=
Where
the
equilibrium
point
of
AD
=
AS
is
beyond
full
employment
-
resources
are
scarce.
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Question.
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Question.
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Question
3
Define
the
following:
Unemployment,
voluntary
unemployment,
involuntary
unemployment.
Check
answer.
Unemployment.
Where
people
are
willing
and
able
to
work,
but
are
unable
to
find
a
job
(employment).
Voluntary
Unemployment.
People
who
do
not
want
a
job
at
the
current
wage
rate.
Involuntary
Unemployed.
People
who
want
a
job
at
the
current
wage
rate,
but
are
unable
to
find
a
job.
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Question.
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Question.
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Question
4
Define
the
following.
Frictional
Unemployment,
Structural
Unemployment,
Cyclical
Unemployment.
Check
answer.
Frictional
Unemployment.
Occurs
when
people
are
between
employment
due
to
lags
in
the
labour
market.
Structural
Unemployment.
Where
the
labour
market
is
not
able
to
match
jobs
with
workers
skills.
When
technology
changes
and
jobs
in
that
industry
become
obsolete.
Cyclical
Unemployment.
Unemployment
that
occurs
during
a
fall
in
business
activity
or
recession.
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Question.
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Question.
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Question
5
The
demand
for
labour
is
a
derived
demand.
What
does
this
mean?
Check
answer.
The
demand
for
labour
is
derived
or
comes
from
the
demand
for
other
goods
and
services.
There
is
no
direct
demand
for
labour.
It
comes
from
the
demand
for
other
commodities.
An
increase
in
demand
for
commodities
will
increase
the
demand
for
labour.
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Question.
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Question.
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Question
6
What
is
a
minimum
wage?
Check
answer.
A
minimum
wage
is
a
wage
rate
set
by
law.
It
is
set
above
the
equilibrium
wage
rate.
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Question.
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Question.
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Question
7
Name
the
points
on
the
diagram
A,
B
and
C.
Check
answer.
Click
to
enlarge
image.
Click
and
hold
to
reduce
.
A
=
Employment
-
the
Quantity
demand
of
labour
is
the
level
of
employment
-
after
the
minimum
wage
has
been
imposed
this
is
the
number
of
people
now
employed
in
the
economy.
B=
Involuntary
Unemployment
-
at
the
new
minimum
wage
these
people
want
a
job,
are
actively
seeking
a
job
and
can
start
immediately
-
but
are
unable
to
find
a
job.
C
=
Voluntary
Unemployment
-
people
unwilling
to
work
at
the
current
minimum
wage.
Previous
Question.
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WINDOW