Answer to Question #82998 in Microeconomics for Harpreet

Question

1. Assume that the unemployment rates for three consecutive years are 7.5%, 8.6%, and 9.5%. Suppose that the employment/ population ratios for the same three years are 56.7%, 57.5%, and 58.3%. Judging by the two measures of labour utilization, is the economy gaining or losing strength?
2. What type of unemployment are the following workers experiencing? Explain.
a) Workers in a fish plant in Newfoundland and Labrador lose their jobs when the cod fishery closes down.
b) Ski lift attendants in British Columbia are laid off due to the lack of snow.
c) A salesclerk in a video store loses her job when a new video store opens around the corner.
d) Bank tellers lose their jobs as bank installed automated teller machines.
e) Lack of consumer confidence and growing pessimism among Canadian business leaders lead to wide-scale layoffs in the natural resources and manufacturing industries.

Answer 1

1. The economy is losing strength, because employment increased by 1.6% and unemployment increased by 2%.

2.

a) Workers in a fish plant in Newfoundland and Labrador lose their jobs when the cod fishery closes down - frictional.

b) Ski lift attendants in British Columbia are laid off due to the lack of snow - frictional.

c) A salesclerk in a video store loses her job when a new video store opens around the corner - frictional.

d) Bank tellers lose their jobs as bank installed automated teller machines - structural.

e) Lack of consumer confidence and growing pessimism among Canadian business leaders lead to wide-scale layoffs in the natural resources and manufacturing industries - cyclical.