In 2018, the US had its lowest unemployment rate for 18 years. Cyclical unemployment was very low and so was the rate of inflation. The US also experienced a rise in labour productivity. However, it did not do so well in reducing poverty. In 2018, approximately 12% of Americans were living in poverty.

Mark scheme

Marking points from the official mark scheme (May/June 2021). The mark or mark type is shown in brackets.

1. [1] Workers without jobs (1)
2. [1] due to a lack or fall in total (aggregate) demand (1)
3. [1] more people unemployed than there are job vacancies (1)
4. [1] in a recession / economic downturn (1).
5. [1] Raise wages / performance related pay / commissions (1) increase motivation of workers (1).
6. [1] Provide training (1) increase workers' skills / efficiency (1).
7. [1] Division of labour by firm (1) enables greater specialisation (1)
8. [1] Buy capital goods / invest (1) workers will be working with better equipment (1).
9. [1] Reduce working hours (1) workers may feel fresher / more alert (1).
10. [1] Improve working conditions (1) reduce stress (1).
11. [1] Subsidise workers' healthcare (1) making them fitter / fewer days lost through illness (1).
12. [1] Working from home (1) reduce stress from travelling (1).
13. [1] Low inflation means prices are still rising (1) but not a high rate (1).
14. [1] May stop purchasing power being reduced too much / wages may keep pace with inflation (1).
15. [1] May increase international price competitiveness (1) as may be below the inflation rate of other countries (1) increasing exports (1) reducing imports (1) improving the current account position (1).
16. [1] May create greater certainty / stability (1) as costs may not be rising significantly (1) encouraging firms / MNCs to invest (1) increasing output / GDP (1) increasing employment / lowering unemployment (1).
17. [1] May encourage saving (1) as real value may be maintained (1) provide funds for investment (1).
18. [1] It may raise profit (1) if demand-pull (1) encouraging firms to expand (1) increasing employment / lowering unemployment (1).
19. [1] May stop a random redistribution of income (1) protecting savers (1).
20. [1] Low menu costs (1) reduce pressure on firms' costs of production (1).
21. [1] increase the income of those who gain jobs
22. [1] absolute poverty may be reduced with more people being able to buy basic necessities
23. [1] tax revenue may rise
24. [1] the government could spend more on benefits for the poor
25. [1] the government could spend more on education, reducing future poverty
26. [1] jobs may be part-time, low-paid, at national minimum wage
27. [1] jobs may be seasonal
28. [1] relative poverty may increase if extra jobs are gained by the well-paid
29. [1] the unemployment rate may fall but unemployment may rise if there are more people in the labour force
30. [1] may be more retired people living in poverty
31. [1] sick and disabled people may not be able to get out of poverty
32. [1] unemployment is only one of a number of factors affecting poverty
33. [1] absolute poverty may remain