bui ticlpation rate (Chapter 3) for a y-population-500; population l6yearsorolde

Question

bui ticlpation rate (Chapter 3) for a y-population-500; population l6yearsorolder and non- sti tutionalized = 400 - ployed and actively seeking work 20; people who have quit seeking work due to lack of success 10; part-time workers seeking ful-time jobs 30 ;people employed full- or part-time 200; people unem 2. What factors tend to understate the extent to which the official unemployment rate accurately measures the degree of economic hardship in the nation? factors lead som overstates economic hardship? What e observers to conclude that the official unemployment rate 3. Use the basic model shown in Figure 18.5 to illustrate graphically each of the following: (a) demand-deficient unemployment and (b) temporary increases in output and employment beyond their natural, or full-employment, levels Define the term structural unemployment and distinguish it from frictional and demand-deficient unemployment. Why might structural unemployment when demand-deficient unemployment declines? 5. Suppose you are an economic adviser to the president, who has asked you to design a program to reduce the amount of unemployment associated with dis- placed workers. What major elements would your plan include? characteristic for the ability of involuntary demand-deficient unemployment to persist for a considerable length of time? 6, Why are nominal wages inflexible downward? What is the implication of this et the official national unemployment rate rises from 4 percent to 8 per- SHOT ON MI DUAL CAMERA ML6

Explanation / Answer

3.) Information is incomplete. The figure is not Given.

4.) Structural unemployment: Structural Unemployment is the long term unemployment. It is the unemployment when skills of an individual don't match with the skills required for the job. It occurs when there is an oversupply of jobs, and also people are ready for doing jobs but they don't join as the skill required for these jobs are not matched with skills people have. This is generally caused by external factors such as technology advancement, competition, and government policy.

On the Contrary

Frictional Unemployment: It is the unemployment caused when people start searching for a new job or when there is a transition from old job to new job. This type of unemployment is also called Search unemployment. This is caused when a new job applicant is there or when a person leaves his job and find a new one for a better opportunity, services, and a higher salary.

Demand Deficient Unemployment: It is also known as cyclical unemployment. It occurs when there is insufficient demand in the economy to support full employment. It occurs during recession period and slow economic growth period. Due to reduction in demand of good or service, there is also reduction in supply production. As a result, workers are removed from jobs which are no longer needed. This unemployment is directly related to the business cycle of the economy. At the peak of the business cycle, cyclical unemployment is low at low points of business cycle employment is high.

A concept of Hysteresis states that when cyclical unemployment is there is much time then people become de-skilled and demotivated. Due to this, there is a mismatch of skills required for job and skill which individual has. This increases structural unemployment. So there is a direct relation between cyclical unemployment and structural unemployment. So when demand deficient unemployment decreases people become more skilled and causes structural unemployment to fall.

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