Macabanti, Patricia Janelle P.

BSED 3-A

1. Explain the probable reason why there is no such thing as Zero (0)
unemployment rate in any economy?

Answer: because in the economics full employment is not the same as zero unemployment. In
the economy even you have people who are willing and capable for work but that is not out
rightly grab job opportunities. Unemployment can never be zero and in fact it can be disruptive
to an economy if it gets too close to zero. Very low unemployment can actually hurt the
economy by creating an upward pressure on wages which invariably leads to higher production
costs and price this can lead to inflation.

2. What would you think would happen to the unemployment rate in the short run if
the economy starts picking up, then all of a sudden the discourage workers starts to
look for job again? Expound on your answer.

Answer: Once unemployment rate increases the economy will start to have problems like
Lower GDP. High unemployment means that the economy runs below maximum potential and is
inefficient, resulting in reduced production and lower incomes. The unemployed are therefore
unable to buy as many items, so they would lead to lower expenditure and lower production. A
rise in unemployment may have a negative effect on multipliers.

3. If you were to become one of the economic managers of the state, what solutions
will you be recommending to solve the problem in:
4. Cyclical Unemployment?

Answer: There are two primary solutions to joblessness reduction: demand-side policies and
supply-side policies. If cyclical unemployment is rising as a result of a recession, it is called
demand-deficient unemployment and is tackled by demand-side policies. Total demand
decreases during a downturn, or recession: families, companies, government, and international
industries purchase less goods and services. Unemployment is increasing as less production is
generated, thereby requiring less jobs and other resources. Businesses face dropping sales and
are forced to cut costs. As a result they are laid off staff.

1. Seasonal Unemployment?

Answer: when seasonal unemployment occurs I recommend trying to diversify the economy.
This could be hard to do in touristy areas. Apply recommend Government creating jobs in the
off-season to improve infrastructure.

2. Structural Unemployment?
Answer: To overcome structural unemployment I’ll recommend Education/training. These
training schemes need to be focused on skills and qualifications which will enable the
unemployed to find work in new industries. This could include the government paying for
training schemes in skills which are in short supply. For example, vocational training such as
bricklaying, plumber, electrician.

3. Frictional Unemployment?

Answer: To solve frictional unemployment I recommend reducing unemployment benefits.

Lower benefits will encourage people to take a job quicker. However, it is not clear whether this
is desirable. It may encourage people to take a job not fully suited to their skills. And apply
better matching of labour with vacant positions. Internet job matching websites have the
potential to find quicker job vacancies for the unemployed. If the database is comprehensive for
all positions, then workers can more easily see which jobs to apply to. There is a case for the
government to undertake a comprehensive job matching service as private sector competition
may diffuse the market.

References:
https://www.khanacademy.org/economics-finance-domain/ap-macroeconomics/economic-iondicators-
and-the-business-cycle/unemployment/a/lesson-summary-unemployment?loggedInViaDiscussion=true

https://www.economicshelp.org/blog/1490/unemployment/cyclical-unemployment/

https://www.economicshelp.org/blog/glossary/frictional-unemployment/?fbclid=IwAR3G1nPVqNyW-
LDyaHI3pGGoo6i3BNvEA3AvzqvKv-BbytkoZzN5WyUClFw

https://www.economicshelp.org/blog/glossary/seasonal-unemployment/?
fbclid=IwAR0uMTKKybvv6sw8JZOTU6WsPF6AHY5wBeALsDmGJWdDC2S6tAdYZl4Uc94

https://www.economicshelp.org/blog/27657/unemployment/structural-unemployment/