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
Latasha is a physician who has decided to relocate to California to be closer to her family. She is currently interviewing with several prestigious hospitals in the San Francisco Bay Area.
Jake recently lost his job as a dishwasher. 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.
Rosa 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.

The following table shows data on frictional, cyclical, structural, and total unemployment for an economy.

Unemployment Type	Rate
	(Percent)
Frictional	3.1
Cyclical	0.0
Structural	1.0
Total unemployment	4.1

True or False: This economy is not currently at its natural rate of unemployment.

True

False

Answer 1

Solution:

Unemployment Type	Type	Explanation
Latasha is a physician who has decided to relocate to California to be closer to her family. She is currently interviewing with several prestigious hospitals in the San Francisco Bay Area.	Frictional Unemployment	Frictional unemployment occurs when the worker transfers from one job to another job. In this period, worker remained as unemployed. This type of unemployment is voluntary on the part of the worker
Jake recently lost his job as a dishwasher. 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.	Structural unemployment	Structural unemployment occurs when there is a mismatch between the skills of labor and skills demanded of workers by employers in the economy.
Rosa 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.	Cyclical unemployment	Cyclical unemployment occurs due to business cycle fluctuations especially recession period.

Natural rate of unemployment = Frictional unemployment + Structural unemployment

Natural rate of unemployment = 3.1 + 1.0 = 4.1

Hence, it is False.

Explanation:

The economy is at its natural rate of unemployment since the natural rate of unemployment of an economy is the sum of frictional and structural unemployment in the absence of cyclical unemployment.