Question

Question 1.)

1. What is natural rate of unemployment? When do we say an economy has full employment?

2. Identify what type of unemployment will result from the following scenarios

1.) Jane has completed college and quit her job at Tim Horton so she can work full-time in her marketing field:

2.) The clothing store George used to work for was shut down as the clothing brand is now selling all its collection through its online website:

3.) The business Hank was working for had to shut down as there has been a decrease in overall demand in the economy:

3. Talk about one policy that the government can use to reduce frictional unemployment

Answer 1

Q1:

Natural rate of unemployment is the combination of three types of unemployment ; Frictional unemployment, Structural unemployment and surplus unemployment. The natural rate of unemployment also represents the lowest unemployment rate whereby inflation is stable or the unemployment rate that exists with non-accelerating inflation. I have elaboratively discussed all these types of unemplyment in the attachment below.

Full employment is seen as the ideal employment rate within an economy at which no workers are involuntarily unemployed.

Q2:

1.) Jane has completed college and quit her job at Tim Horton so she can work full-time in her marketing field:

Frictional unemployment

2.) The clothing store George used to work for was shut down as the clothing brand is now selling all its collection through its online website:

Structural Unemployment

3.) The business Hank was working for had to shut down as there has been a decrease in overall demand in the economy:

Cyclical Unemployment

Q3: This I have discussed in the frictional unemployment case. see attachment.

Dear Student/ Learner, it was my great pleasure to help you solving this problem. I wish you best luck for your learning endeavour.
Happy Learning