2/11/2025 Flashcards
What is cyclical unemployment?
Cyclical unemployment is the result of a downturn in the business cycle
It occurs temporarily during economic contractions.
What causes cyclical unemployment?
Cyclical unemployment is caused by a contraction in the economy
It is often linked to recessions.
Give an example of cyclical unemployment.
An example of cyclical unemployment is someone who is laid off because a company isn’t selling enough due to a recession
This leads to the company being unable to afford to pay them.
What is structural unemployment?
Structural unemployment occurs when the skills of workers do not meet the skills demanded by employers
It often results from technological changes.
What is a common reason for structural unemployment?
A common reason for structural unemployment is technological change
This can make certain skills obsolete.
Provide an example of structural unemployment.
An example of structural unemployment is a typewriter repairman
Their skills became obsolete as typewriters are no longer used.
What is frictional unemployment?
Frictional unemployment occurs when workers are between jobs
short-term unemployment that happens when people change jobs or enter the workforce.
It includes individuals who have just entered the workforce.
Who might be considered frictionally unemployed?
Someone who quits a job and is looking for a new one
This reflects the transitional nature of frictional unemployment.
What is the GDP formula:
C + I + G + (X-M)
y= National Income (GDP)
C= Consumer Spending
I= Investment
G= Government spending
X= Exports
M= Imports
