Answer to Question #138992 in Macroeconomics for don

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

a.It is Cyclical unemployment because, this type of unemployment occurs when individuals lose their jobs as a result of a downturn in aggregate demand. A Global pandemic is an unusual combination of supply and demand shocks.These shocks propergate through the supply chains cauing different sectors to be demand constraints thus causing cyclical unemployment.

b.Structural unemployment occurs when an industrial labour demand decreases because of long term changes in conditions. In this case,the change in the market conditions is import of textile and workers doing other jobs that are available because of the new feature.