The chart below shows the UK unemployment rate, seasonally adjusted, from 2008 to 2015 (Source: http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/december-2015/statistical-bulletin.html#tab-8-Unemployment) (a) Which one of the following types of unemployment best explains the change in the data between 2008 and 2010? A Cyclical B Frictional C Seasonal D Voluntary (b) Explain the likely effects on the circular flow of income of the change in unemployment between 2013 and 2015. - Edexcel - A-Level Economics A - Question 1 - 2017 - Paper 2

The change in unemployment between 2013 and 2015 is likely to affect the circular flow of income in multiple ways:

1. Impact on Income: As unemployment declines, more individuals gain employment, which increases household income. This change leads to higher consumption as individuals spend more on goods and services.

2. Injections and Withdrawals: The increased income represents an injection into the circular flow of income, promoting economic growth. In contrast, higher unemployment generally signals withdrawals, reducing overall consumption.

3. Effects on Firms: As households spend more, firms experience increased demand for their products, which may lead to further hiring, hence continuing the positive feedback loop in the economy.

4. Diagrammatic Representation: A diagram of the circular flow of income could illustrate these relationships, highlighting flows between households and firms. As firms provide wages, households consume goods, and this cycle continues to reinforce economic stability.