Unemployment in South Africa

1.

a). According to Parkin et. al., frictional unemployment is the healthy, ongoing phenomenon of people entering and leaving the work force. Frictional unemployment is a result of job creation and job destruction.

Structural unemployment is a result of changing technologies or the nature of the demand of skills change for a given position.

Cyclical unemployment is unemployment that arises out of fluctuations in the business cycle. Unemployment that results from a recession is cyclical unemployment (2008:497,498).

b). According to the Star, Minister Davies substantiates his view that South Africa’s high unemployment rate is structural by stating that before the trough in the business cycle, ie; the recession, South Africa’s unemployment rate never fell below 22.8 percent (2010:23).

c.) Minister Davies argues that further credit driven growth will not solve the problem of unemployment in South Africa because of the structural nature of the problem, namely its not an issue of growth so forcing the business cycle up will make no difference.

2.

a). The GDP from the expenditure side is calculated using the following formula:

GDP (Exp) = Consumption + Investments + Government Expenditure

+ (Exports - Imports)

Working out the GDP from the table in our course booklet would go something like this:

GDP (Exp) = 1119713+374230+381639+(-38358)+13859+(419071-478819)

= 1 791 335

b). GDP at current prices at price that included inflation. GDP at constant prices are prices that have had inflation subtracted from them. GDP at constant prices are more useful because they give a more accurate display of changes in the GDP.

c). GDP (Inc) = wages + interest + rent + profit.

List of References:

· PARKIN, M, POWELL, M, MATTHEW, K, 2008. Economics (7e). Essex, England: Pearson.

· Star, 2010.