Answer to Question #138789 in Macroeconomics for sisi

Question

How would the unemployment rate be affected in each of the following case?
Explain your answers by referring to the specific type of unemployment (frictional,
structural or cyclical unemployment) affected in each of the case.

i. A global pandemic badly hits Country X.
ii. Some textile workers in Country X become jobless due to more imports of
textile products from Country Y. It is expected that after receiving training,
these workers can all find jobs in the retail sector.

Answer 1

(i) Due to a global pandemic, the unemployment rate in country X is likely to increase, This can be attributed to cyclical unemployment.

(ii) The unemployment rate will increase. Structural unemployment also occurs when the demand for relevant skill in the economy decreases. Thus, this refers to structural unemployment.