Question

13. The government subsidizes education and retraining for workers who have lost their jobs because of advances in technology. Which TYPE of unemployment does this policy address? 14. In May of 2000, economists were saying that the US economy was close to full employment even though the unemployment rate was 4.1%. Explain. 15. Using the following data on the Consumer Price Index for a fictitious economy, tell whether there has been inflation, deflation (or neither) from each year to the next: inflation?/deflation?/neither XXX Year 1978 1979 1980 1981 1982 CPI 130 120 100 110 120

i need help please...

Answer 1

Ans) 1) Structural unemployment is when workers lack required skills. Here the job is lost due to technological change, competition or change in government policy. In this case, jobs are present but there is a mismatch in skills required and skills provided.

So here the government is trying to address structural unemployment.

2) Full employment is a situation of zero unemployment rate. It can be possible in theory but not in practice due to presence of Frictional and structural unemployment. (Frictional unemployment is when people leave one job to search new one or people are in phase of searching job)

So, full employment is measured using different criterions where we assume that certain level of unemployment will always exist in an economy. Eg- natural rate of unemployment and NAIRU.

3) Inflation is general rise in price whereas deflation is general decline in prices.

So by seeing the change in price level, we can tell its inflation or deflation.

%change = [(final - initial)/initial]×100

A) Change = [(120-130)/130]×100 = -7.7% (deflation)

B) Change = [(100-120)/120]×100 = -16.7% (deflation)

C) Change = [(110-100)/110]×100 = 9.1% (inflation)

D) Change = [(120-110)/120]×100 = 8.33% (inflation)