In order to improve the living standards of the people in Philippines after the devastating typhoon Haiyan, the government decided to increase the labour wage per hour from AUD 17.50 to AUD 25.00. Also, Philippines experienced structural unemployment and frictional unemployment.

i.What is the hardest type of unemployment that Philippines experienced as a result of typhoon Haiyan? Explain your answer. (4 marks)

ANSWER:

ii.Use the figure below to examine the effects of the government minimum wage of AUD 25.00 in Philippines.

a.Examine the effect of government minimum wage of AUD 25.00.Assume the increase labour is equivalent to the total labour force and calculate the unemployment rate (3 Marks)

ANSWER:

The figure below indicates that the aggregate demand curve slopes left to right downwards. Explain the factors that account for the shape of the Aggregate demand curve.