Chapter 13, Problem 2FRQ

a)

To determine

The question requires us to determine the type of unemployment.

Answer to Problem 2FRQ

Frictional unemployment

Explanation of Solution

An individual is considered unemployed who is not working, but actively looking for a job.

Frictional unemployment reflects the unemployment that occurs during the time workers spend in a job search.

She took time in searching for a suitable job according to her skills and wage requirements as she has rejected a few low-paying jobs. So, she is frictionally unemployed.

b)

To determine

The question requires us to determine the type of unemployment.

Answer to Problem 2FRQ

Structural unemployment

Explanation of Solution

Structural unemployment is the unemployment that results when workers available for work lack the skills required for the job, or when the number of people seeking jobs is more than the jobs available in the labor market at the given wage rate.

In the given scenario, she has the skill which is no longer required by the employers. Due to the mismatch between the skills she has and the firms needed, Melanie is considered structurally unemployed.

c)

To determine

The question requires us to determine the type of unemployment.

Answer to Problem 2FRQ

Cyclical unemployment

Explanation of Solution

Unemployment that occurs due to fluctuations in the business cycle (recession or boom period) is considered cyclical unemployment.

The given scenario represents the presence of cyclical unemployment because she has been laid off due to the current slump in the market. She will be hired back when the market situation picks up. As cyclical unemployment rises during a recession while it falls during an expansion in an economy.

So, she is cyclically unemployed.