In the last two quarters, economic growth has been -0.25% and - 0. 5%, respectively. This is proof that the economy is now in recession. The biggest effect of this is to be seen in the labour market, where the unemployment rate has increased from 12% to 13. 5% in the last year. It is essential that the government addresses this problem.

Using an AD/ AS diagram, explain the type of unemployment that has occurred in the economy.