Unemployment

Question 1

Explain the term structural unemployment.

Answer 1

Results because the number of jobs available in some markets is insufficient to provide a job for everyone who want to have one.
It often results when wages and wage expectations are above the equilibrium level in the respective market.

Question 2

Is a 100% employment rate possible in a free market economy?

Answer 2

As scarce resources are allocated through the market process, there are always some people unemployed; hence a 100% employment rate cannot be achieved in a free market economy. Economist usually refer to a full employment if the unemployment rate is between 3% and 6%