1. Why is the labour force underutilisation rate a more realistic measure for determining the health of the labour market, rather than just relying on the unemployment rate?

2. Assume that in September 2022 the Reserve Bank of Australia announces an increase in the cash rate in response to inflationary pressures. What would be the likely effects of this change in monetary policy on Real GDP? Provide a few sentences of explanation, by referring to the channels through which real GDP will be impacted.

3. What is frictional unemployment?

4. Explain why it is argued from both a social and economic perspective that full employment should be one of the main macroeconomic policy goals.