3. Types of unemployment The three people described in the following table are c

Question

3. Types of unemployment The three people described in the following table are categorized as unemployed by the Bureau of Labor Statistics. Identify each person in the table as structurally, frictionally, or cyclically unemployed Structural Frictional Cyclical Unemployment Type Amy just graduated from college and is looking for a full-time position with an investment banking firm. Deborah is a real estate agent. House sales in her area have declined because the region has been going through a recession. She has no clients and is currently looking for a new full-time job. Van left his job as a plumber when his wife took a position in another region. The quantity of plumbing services demanded is considerably lower in the new region, in part because of high union-negotiated wages. He would like to work at the high union wage but remains unemployed due to a lack of plumbing jobs. The following table shows data on frictional, cyclical, structural, and total unemployment for an economy. Rate Unemployment Type (Percent) Frictional 3.9 Cyclical0.0 1.1 5.0 Structural Total unemployment

Explanation / Answer

Ans:

Structural unemployment is the unemployment caused due mismatch between the jobs available and the skill levels of the unemployed.

Cyclical unemployment is the unemployment is the unemployment caused due to cyclical trends in the business cycle.

Frictional unemployment is caused when people leave their current jobs to find better jobs.

2) False

The economy is at its natural rate of unemployment since cyclical unemployment is not considered in computing natural rate of unemployment and in this case cyclical unemployment is zero.

Particulars Unemployment type Amy Structural unemployment Deborah Cyclical unemployment Van Structural unemployment

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