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ch. 9 written hw assignment, in d2l
Typology: Assignments
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In this paragraph, we will address types of unemployment and their causes. Unemployment in economics comes in several forms, each with its unique causes and terms. The main types of unemployment are structural, frictional, cyclical, and seasonal. Structural unemployment results from a mismatch between the skills and qualifications of job seekers and the requirements of the jobs. This can sometimes occur due to technological changes or shifts within the economy. For example, the fall of traditional manufacturing businesses led to structural unemployment as workers with specific skills became unnecessary. Next, frictional unemployment is temporary and happens when people are between jobs, either because they are entering the workforce for the first time or transitioning to a new job voluntarily. It's a natural part of the labor market as people search for better opportunities. Moreover, cyclical unemployment is closely related to the business cycle. When an economy experiences a recession, demand for goods and services decreases, leading to layoffs and job losses. Conversely, during economic growths, cyclical unemployment decreases as businesses hire more workers to meet increasing demand. Lastly, seasonal unemployment hits due to predictable fluctuations in demand connected to certain seasons or times of the year. Examples are agricultural workers who are unemployed during the winter or retail workers hired for the holiday season. Each type of unemployment has distinct causes and consequences for the labor market and the overall economy. The natural rate of unemployment, also known as the "non-accelerating inflation rate of unemployment", is an important concept in economics. It represents the level of unemployment there is when the economy is working at its potential output and experiencing stable inflation. The natural rate of unemployment consists of both frictional and structural unemployment. These are the types of unemployment that stay even in a healthy, growing economy. Frictional
unemployment is because of individuals transitioning between jobs, while structural unemployment is caused by differences between the skills of workers and the requirements of jobs. When the actual unemployment rate falls below the natural rate, it can lead to pressure on wages and then, inflation. On the contrary, when the actual unemployment rate beats the natural rate, there may be a fall of wages and deflationary shifts. Economists and policymakers observe the natural rate of unemployment as it provides insights into the status of the labor market and helps guide policies. Maintaining an unemployment rate close to the natural rate is a key reason for stabilizing the economy and guaranteeing steady economic growth. In summary, the natural rate of unemployment represents the level of unemployment in a well-functioning economy, and it consists of frictional and structural unemployment. It plays a necessary role in shaping economic policies aimed at achieving both full employment and price stability.