Answer to Question #139403 in Macroeconomics for fion

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.

a. A global pandemic badly hits Country X.
b. 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 is because a global pandemic is an unusual combination of supply and demand shocks. Thus, causing cyclical unemployment.

II) The unemployment rate will increase. Structural unemployment occurs when the demand for relevant skills in the economy decreases because of long term changes in conditions. In this case, the change in market conditions is import of textile and workers doing other jobs that are available because of the current situation.