Question

Please answer all in microsoft word doc.

Define, discuss, and provide real world examples of how the 3 main categories of unemployment affect individual households, individual firms, and the entire economy.

Answer 1

Unemployment is defined as the number or proportion of unemployed people.

There are three major types of unemployment i.e., cyclical, frictional, and structural unemployment.

Cyclical unemployment is when workers lose their jobs because of downturns in the business cycle.When the economy enters a recession, many of the jobs lost are considered cyclical unemployment.when demand for goods and services fall dramatically, forcing businesses to lay off large numbers of workers to cut costs.it is because the laid-off workers have less money to buy the things they need, further lowering demand.Due to this,individual households, individual firms and the economy are affected due to less demand.

For example, during the Great Depression, the unemployment rate surged as high as 25%. That means one out of four people were willing and able to work, but could not find work and loss of construction jobs during the 2008 financial crisis. As the housing crisis unfolded, home builders stopped constructing new homes. As many as 2 million construction workers lost their jobs. Whenever home building starts up again, they will be able to go back to work.

Frictional unemployment is the unemployment which exists in any economy due to people being in the process of moving from one job to another.

In other words, it occurs because of the normal turnover in the labor market and the time it takes for workers to find new jobs. It also happens when workers are fired or, in some cases, laid off due to business-specific reasons, such as a plant closure.it does not affect more on households,firms and economy

It is short-term and a natural part of the job search process. In fact, frictional unemployment is good for the economy, as it allows workers to move to jobs where they can be more productive.

When Modi graduates from college, he begins looking for work. Let's say it takes her six months to land a new job. During this time, he is frictionally unemployed.

Structural unemployment is unemployment resulting from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand.

In other words, it occur in the economy that creates a mismatch between the skills workers have and the skills needed by employers.A long recession often creates structural unemployment. If workers stay unemployed for too long, their skills have likely become outdated. Unless they are willing and able to take a lower-level, unskilled job, they may stay unemployed even when the economy recovers. If this happens, structural unemployment leads to a higher rate of natural unemployment.

example when an industry fires machinery workers and replaces them with robots. The workers need to learn how to manage the robots that replaced them. Those that don't need retraining for other jobs or will face long-term structural unemployment.

Diue to recession, software industry broke down which led to loss of many jobs but after recession,there is an shift of technology then mismatch of skills occurred.