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Economic Challenges

Economic Challenges. Unemployment. Frictional Unemployment. What is Frictional Unemployment? Frictional Unemployment occurs when people take time to find a job What are some causes of frictional unemployment? Graduating from a university Job loss Career advancement Childbearing

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Economic Challenges

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  1. Economic Challenges Unemployment

  2. Frictional Unemployment What is Frictional Unemployment? Frictional Unemployment occurs when people take time to find a job What are some causes of frictional unemployment? • Graduating from a university • Job loss • Career advancement • Childbearing Are economists worried about Frictional Unemployment? Economists are not concerned with frictional unemployment in a large economy like that of the United States. Frictional unemployment is fully expected and

  3. Seasonal Unemployment What is Seasonal Unemployment? Unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season. What are the causes of seasonal unemployment? • Weather patterns • Recessions • Injuries • Long vacations Are economists concerned with seasonal unemployment? Like frictional unemployment, economists expect this type of unemployment in a fully functioning economy. With that said, economists are not concerned with seasonal unemployment.

  4. Structural Unemployment What is Structural Unemployment? Unemployment that occurs when workers skills do not match the jobs that are available. What are the causes of Structural Unemployment? • Technological advancements • Discovery of new resources • Shifts in consumer demand • Globalization Are economists concerned with structural unemployment? Yes and because of this in 1990, policymakers recognized that computer technology, globalization, and other structural changes posed a threat to the US labor force. Job-training forces were put into place in order to improve the human capital present in labor force.

  5. Cyclical Unemployment What is Cyclical Unemployment? Unemployment that rises During economic downturns that falls when the economy improves What causes Cyclical Unemployment? • Recessions • Strict budgeting • Decreases in GDP Are economists concerned about cyclical unemployment? Economists are very concerned about cyclical unemployment, however it is expected following the standard business cycle model. Programs like unemployment insurance are put into place to ease the hurt cyclical unemployment.

  6. Unemployment Rate What is the Unemployment Rate? The percentage of the nation's labor force that is unemployed What affects the unemployment rate? • New Occupations • Mass Layoffs • Economic Growth Do economists worry about the Unemployment Rate? Yes, because if the Unemployment rate gets too high the economy won't be able to grow mainly because people wouldn't be able to pay their bills which would result in debt and causing a disruption in output. This also would cause a larger gap between actual and potential real GDP.

  7. Full Employment What is Full Employment? The employment that is reached when there is no Cyclical Unemployment. What causes full employment? • Nonexistent cyclical unemployment • Reverting back to subsistence economy • Continuous economic growth in an area (no economic downturns) Is full employment? Economists are not worried about full employment

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