types/causes of unemployment

Question 1

two major groups of unemployment

Answer 1

-disequilibrium unemployment: cyclical, real wage
-equilibrium unemployment (natural rate of unemployment): structural, seasonal, frictional

Question 2

cyclical unemployment and how and another name

Answer 2

-demand deficient
-unemployment due to a recession due to a lack of AD

-derived demand, lower demand, to keep profit margins high and will cut labour costs

Question 3

real wage unemployment and how

Answer 3

-classical unemployment
-when wages are forced above equilibrium in labour market causing excess supply of labour

-contraction of labour demand (wage diagram)
-governments intervention (high min), trade unions

Question 4

structural unemployment (what it is, types, why)

Answer 4

-immobility of labour due to a long-term change in structure of industry

-occupational: skills mismatch
-geographical: workers not willing/able to move

-tech advancement: replace human capital with physical capital, online banking
-loss of comparative advantage: when industry can produce a g/s for a lower cost than a similar industry abroad
-modernisation/ new industry growth

Question 5

frictional unemployment

Answer 5

-unemployment experienced when you are in between jobs (moving jobs, laid-off, university)

Question 6

seasonal unemployment

Answer 6

temporary changes in demand: ski instructor in the summer, scuba diving in the Bahamas