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QUESTION:
The three people described in the following table are categorized as unemployed by the Bureau of Labor Statistics.
Identify each person in the table as structurally, frictionally, or cyclically unemployed.
Unemployment Type
Structural
Frictional
Cyclical
Lucia is a real estate agent. House sales in her area have declined because the region has been going through a recession. She has no clients and is currently looking for a new full-time job.
Eric recently lost his job as a delivery driver. Minimum-wage legislation keeps employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work.
Ginny just moved with her husband to Bismark, North Dakota. She's looking for a job as a judicial clerk.
The following table presents data on frictional, cyclical, structural, and total unemployment for an economy.
Unemployment TypeRate
(Percent)
Frictional3.0
Cyclical0.0
Structural1.0
Total unemployment4.0
True or False: This economy is not currently at its natural rate of unemployment.

ANSWER:

The three people described in the following table are categorized as unemployed by the Bureau of Labor Statistics.
Identify each person in the table as structurally, frictionally, or cyclically unemployed.
Unemployment Type
Structural
Frictional
Cyclical
Lucia is a real estate agent. House sales in her area have declined because the region has been going through a recession. She has no clients and is currently looking for a new full-time job.
Eric recently lost his job as a delivery driver. Minimum-wage legislation keeps employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work.
Ginny just moved with her husband to Bismark, North Dakota. She's looking for a job as a judicial clerk.
Points:
1 / 1
Close Explanation
Explanation:
Structural unemployment arises from a mismatch between the jobs available in some labor markets and the skills of workers. One cause of structural unemployment is institutional factors such as a minimum wage, which holds wages above the marginal productivity of less skilled workers, limiting their employment opportunities.
Frictional unemployment occurs because job seekers and employers need time to find one another. Therefore, Ginny is considered to be frictionally unemployed. This kind of unemployment is usually brief.
Cyclical unemployment is the form of unemployment associated with business cycles. This kind of unemployment rises during recessions and falls during expansions. Because Lucia lost her job due to the recession, she would generally be considered to be cyclically unemployed.
The following table presents data on frictional, cyclical, structural, and total unemployment for an economy.
Unemployment TypeRate
(Percent)
Frictional3.0
Cyclical0.0
Structural1.0
Total unemployment4.0
True or False: This economy is not currently at its natural rate of unemployment.
Correct
Points:
1 / 1
Close Explanation
Explanation:
Total unemployment is the sum of frictional, structural, and cyclical unemployment. If there is no cyclical unemployment, the economy is at its natural rate of unemployment, equal to the sum of frictional and structural unemployment. In this case, because cyclical unemployment is 0.0%, the economy is at its natural rate of unemployment.

Posted by Cleveland on September 9, 2024
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