Unemployment

Question 1

Unemployment

Answer 1

refers to a situation where individuals that are supposed to be used in production are willing and able to be employed at the existing wage rates, but are not utilized or underutilized.

Question 2

Unemployment rate

Answer 2

No. employed/total no. of workforce *100

Question 3

Types of unemployment

Answer 3

Open voluntary 
Open involuntary 
Natural rate of unemployment 
Frictional 
Seasonal 
Structural
Cyclical
Under-employment
Disguised

Question 4

Cyclical unemployment

Answer 4

Cyclical unemployment is the component of overall unemployment that results directly from cycles of economic upturn and downturn. Unemployment typically rises during recessions and declines during economic expansions.

Question 5

Open voluntary unemployment

Answer 5

When unemployment is voluntary, it means that a person has left his job willingly in search of other employment.

Question 6

Open involuntary unemployment

Answer 6

it means that a person has been fired or laid off and must now look for another job.

Question 7

Seasonal unemployment

Answer 7

Seasonal unemployment is when people who work in seasonal jobs become unemployed when demand for labor decreases. This typically occurs when a specific time of year ends or a new season begins, such as for a holiday or due to weather changes. For example, someone who works at a resort during the summer might experience unemployment once the fall arrives and summer facilities have to close.

Seasonal unemployment often takes place in locations that see high volumes of tourists, as different tourist attractions can close or slow their operations depending on the time of year and season.

Question 8

Frictional unemployment

Answer 8

This is caused by the time lag involved in redeployment of labor. This type of unemployment is caused by mobility problems in the labor market, which result in friction in the labor market. This friction is either due to communication problems or mismatch between job opportunities and job seekers

Question 9

Natural rate unemployment

Answer 9

The natural rate of unemployment represents the lowest unemployment rate whereby inflation is stable or the unemployment rate that exists with non-accelerating inflation.

Question 10

Disguised unemployment

Answer 10

this refers to a situation where labor that is employed in a job is not actually utilized for the production of goods and services. Sometimes disguised unemployment could simply be a form of underemployment wherein the skills of a labor force are not utilized to their full capacity

Question 11

Under employment

Answer 11

Underemployment is a measure of employment and labor utilization in the economy that looks at how well the labor force is being used in terms of skills, experience, and availability to work. It refers to a situation in which individuals are forced to work in low-paying or low-skill jobs.

Question 12

Structural unemployment

Answer 12

Structural unemployment is a form of involuntary unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers. Structural unemployment is often brought about by technological changes that make the job skills of many workers obsolete.

Question 13

Causes of unemployment

Answer 13

Lack of cooperating factors
Rapid population growth
Inappropriate technology
Relative factor price distortions
The education system
Seasonal nature of production
Rural urban migration

Question 14

Policies for curing unemployment

Answer 14

• Wage subsidies. Subsidizing wages means lowering wages hence firms will employ more people.
• Restructuring the education system to provide more skills so that people become more productive.
• Increasing the number of institutions to train agricultural labor and then subsidize capital since labor works with it
• Increasing incentives by changing product prices. This raises the benefits from labor thus causes a shift in the demand for labor
• Import substitution. More people will be employed in the industries that produce what the country used to import
• Export promotion. This will expand output hence increase labor employment

Question 15

The Philips Curve

Answer 15

It relates the rate of inflation with the rate of unemployment.
It argues that unemployment and inflation are inversely related: as levels of unemployment decrease, inflation increases.
The relationship, however, is not linear.
Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis