Chapter 8 unemployment

Question 1

Underemployment

Answer 1

Underemployment is the ability of labour to obtain employment but is not being used to the maximum ability

Question 2

Cyclical unemployment

Answer 2

Cyclical unemployment is caused by inadequate demand for a country’s goods and services due to fluctuations in the business cycle

Question 3

Structural unemployment

Answer 3

Structural unemployment refers to the mismatch between the skills possessed by retrenched workers and the skill required by new industries

Question 4

Frictional unemployment

Answer 4

Frictional unemployment is the unemployment due to job search in the process of transitioning between jobs
It is part of the natural rate of employment

Question 5

Seasonal unemployment

Answer 5

Unemployment resulting from the seasonal nature of the demand for the final product