4.2.3.2 Employment and unemployment

Question 1

What effect would a strong exchange rate have on domestic employment?

Answer 1

A high exchange rate means that exports will be less internationally competitive and as a result less exports will be bought which means less labor is needed.

Question 2

What is structural unemployment?

Answer 2

Unemployment caused by a decline in a certain industry or occupation as a result of technological advances or changes in consumer taste. Or cheaper alternatives caused by international competition.

Question 3

What is frictional unemployment?

Answer 3

Unemployment between leaving one job and starting another.

Question 4

What is cyclical unemployment?

Answer 4

When employment levels fall as a result of a fall in aggregate demand.

Question 5

What is seasonal unemployment?

Answer 5

Unemployment caused by the fact that certain industries do not have the same demand for labor all year round.

Question 6

What is real wage unemployment?

Answer 6

Unemployment caused by real wages being pushed above the equilibrium level of employment.