Chapter 8, Problem 3P

To determine

To explain:

The each type of situations given with what type of unemployment is Melanie facing.

Concept Introduction:

Unemployment: When the people are willing and able to work at the market wage rate, but are not getting work, then this situation in the economy is called as unemployment. Unemployment is basically used to measure health of any economy.

Types of Unemployment: There are three types of unemployment as given below:

• Cyclical Unemployment: Large number of people loses their jobs at the time of recession, but these jobs are retained back when the economic situation improves, so this type of unemployment is referred as cyclic unemployment.
• Structural Unemployment: During a particular period of time the demand of some products increases, therefore skill required to produce that product also increases, the people who do not possess that skill get unemployed. This is referred as structural unemployment.
• Frictional unemployment: This kind of unemployment exist when the employed people leave their job in order to find more better job, this kind of unemployment is voluntary in nature.