ECONOMIC. DATE: 25TH OCTOBER 2012.
1) List and explain the three different types of unemployment. Give an example for each. Answer:
Frictional Unemployment: The Glossary of Economics Terms defines frictional unemployment as:"Frictional unemployment is unemployment that comes from people moving between jobs, careers, and locations." Sources of frictional unemployment include the following:
* People entering the workforce from school.
* People re-entering the workforce after raising children. * People changing unemployers due to quitting or being fired (for reasons beyond structural ones). * People changing careers due to changing interests.
* People moving to a new city (for non-structural reasons) and being unemployed when they arrive. Cyclical Unemployment:
The Glossary of Economics Terms defines cyclical unemployment as:"Cyclical unemployment occurs when the unemployment rate moves in the opposite direction as the GDP growth rate. So when GDP growth is small (or negative) unemployment is high." * Recession. Getting laid off due to a recession is the classic case of cyclical unemployment. This is why the unemployment rate is a key economic indicator What About Seasonal Unemployment?:
Seasonal unemployment is unemployment due to changes in the season - such as * a lack of demand for department store Santa Clauses in January. Seasonal unemployment is a form of structural unemployment, as the structure of the economy changes from month to month. Structural unemployment: when the structure of industry changes. * As PCs replaced typewriters, typewriter factories shut down. Workers in typewriter factories became unemployed and had to find other industries to be employed in.
2) A country called “Macro-Mania” has 450,000 adult population of which 120,000 is unemployed. 30,000 are housewives, 350 are institutionalized and 1,500 are full time students. Calculate: a. The Labour Force for “Macro-Mania”?
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