2.2 Unemployment

• What is the definition of unemployment in economics?

  Willing and able to work, no job
• Unemployment occurs when a person is not currently employed but is actively searching for a job
• Why is Jane considered unemployed in the example provided?

  Company downsizing
• What is a common cause of cyclical unemployment?

  Economic downturns
• The definition of unemployment is: a person is not currently employed but is actively searching for a job
• What is an example of frictional unemployment?

  A graduate looking for a job
• Unemployment is a key economic indicator because high unemployment can signal economic recession or stagnation.


  True
• What condition must a person meet to be considered unemployed?

  Available to start working
• Match the type of unemployment with its description:

  Frictional Unemployment ↔️ Temporary unemployment due to workers moving between jobs

  Structural Unemployment ↔️ Unemployment arising from a mismatch between job skills and available jobs

  Cyclical Unemployment ↔️ Unemployment caused by fluctuations in the business cycle
• Frictional and seasonal unemployment are considered less problematic than structural and cyclical unemployment.


  True
• Match the type of unemployment with its example:

  Cyclical Unemployment ↔️ Workers laid off due to decreased sales

  Seasonal Unemployment ↔️ Ski resort workers laid off during the summer months
• Frictional and seasonal unemployment are generally considered less problematic because they are more temporary
• What does the unemployment rate measure?

  Percentage of the labor force that is unemployed
• In the example provided, the unemployment rate is approximately 7.69%.

  True
• Unemployment occurs when individuals who are willing and able to work do not have a job
• Arrange the four types of unemployment from most temporary to most cyclical in nature:

  1️⃣ Frictional

  2️⃣ Seasonal

  3️⃣ Structural

  4️⃣ Cyclical
• Cyclical unemployment is caused by fluctuations in the business cycle
• What is the formula for calculating the unemployment rate?

  (Number of Unemployed / Labor Force) × 100
• The unemployment rate is a key measure of economic health.

  True
• Match the policy approach with its description and example

  Fiscal Policy ↔️ Government spending and taxation to influence aggregate demand ||| Increased spending on public works projects to create construction jobs

  Monetary Policy ↔️ Central bank actions to adjust interest rates and money supply ||| Lowering interest rates to encourage business investment and consumer spending

  Structural Policies ↔️ Policies to address skills mismatches and improve labor market flexibility ||| Investing in job training programs to upskill workers
• What are the four main types of unemployment?

  Frictional, structural, cyclical, seasonal
• Frictional unemployment occurs when workers are laid off due to decreased sales during a recession.

  False
• The formula to calculate the unemployment rate is: Unemployment Rate = (Number of Unemployed / Labor Force) × 100
• What is the negative impact of high unemployment on the economy?

  Decreased consumer spending
• An individual actively applying for jobs after being laid off is considered unemployed.

  True
• What causes structural unemployment?

  Mismatch between job skills
• Seasonal unemployment affects industries like tourism and agriculture.


  True
• The labor force is the sum of the number of employed and unemployed individuals.
• Order the key effects of high unemployment on the economy

  1️⃣ Decreased Consumer Spending

  2️⃣ Reduced Aggregate Demand

  3️⃣ Lower Business Investment

  4️⃣ Economic Stagnation or Recession
• Structural policies address the root causes of unemployment, particularly structural and frictional unemployment.