Problem
As per National Skills Commission's Report published on 16 May 2022, COVID-19 had a significant negative impact on the Australian labour market. Employment initially contracted by 6.7% between March 2020 and May 2020. However, in June 2022, the unemployment rate in Australia reached a record low of 3.5%.
Thinking about these unemployment figures, answer the following questions:
i. Identify the type of unemployment COVID-19 may have caused during 2020-22? Provide reasons why it may not have caused other types of unemployment.
ii. Discuss what factor(s) may have helped the Australian economy to achieve such a turnaround and reach record low levels of unemployment. Explain the relation between the factor(s) and the employment rate. HINTS: Such factors may be related (but not limited) to the economy's performance in general, government actions, and the way unemployment is defined/measured. (4 marks)
iii. Assuming the unemployment rate falls further, what impact would that have on inflation and nominal GDP?