Question

QUESTION 2: UNEMPLOYMENT AND INFLATION

Even when the economy has a strong economic growth rate there will always be some unemployment in the economy.

(i) Identify the types of unemployment that are being referred to above.
(ii) Discuss an appropriate government policy response to decrease the unemployment types identified in (i).

300-400 words please

Answer 1

i)The natural rate of unemployment is the rate of unemployment that exist in a growing and healthy economy.The natural rate of unemployment includes only frictional and structural unemployment and not cyclical unemployment. The unemployment that occurs as workers move between jobs is frictional unemployment . The structurally unemployed are people who have no job and lack skills required in the labor market.

ii) Structural unemployment is caused by technological changes .The existing jobs may become obsolete and leave many people unemployed with the introduction of new technologies.Again globalization may cause increased competition around the world and lead to structural unemployment..Government policies to reduce structural unemployment are -education and training to the unemployed to increase qualification which will help in finding new jobs..The government gives relocation subsidies to assist movement of workers.The government also offers incentives to create job opportunitiesThe government can decrease unemployment benefits to make workers look for jobs fast.

Frictional unemployment can be reduced by matching job openings with prospective job seekers .Workers can use social media , internetand job searching wed sites to look for jobs.This can lead to getting hired faster and thus reducing frictional unemployment..Policies to reduce frictional unemployment also include educational advice, providing information on available jobs,reduction of unemployment benefits will make a person look for job fast etc.