1) (a) Discuss the different types of unemployment. (20 marks) Unemployment is a condition where a person is without employment but at the same time wishes to be employed. There are a number of types of unemployment, which are as follows: Frictional unemployment: Frictional unemployment is short term and occurs when someone changes jobs. This type of unemployment is arguably inevitable as a result of the job search process and labour mobility. Seasonal unemployment: As a result fluctuating demand in relation to season, demand for labour also fluctuates, in certain seasons the demand for labour could drop, resulting in unemployment. Examples of businesses affected by seasonal unemployment are those related to tourism e.g. hotels and tourist resorts. Major festivals could also contribute towards this. Structural unemployment: Change in structure of industries can result in unemployment. If a certain industry is experiencing recession or has made advances in technology, the demand for labour could fall as business try to save money and cut down on workers or replace them with technology. “Voluntary” unemployment: this is an idea associated with certain economists who believe that certain individuals choose to be unemployed and claim benefits instead of accept work where the pay levels are similar. Cyclical unemployment: Cyclical unemployment is also known as deficient-demand unemployment, it occurs when there is a lack of aggregate demand (AD) to be able to offer jobs for everyone. Since demand falls, less production is needed, hence a fall in employed workers. With cyclical unemployment the unemployed workers outweigh the number of jobs available.
(b) The Office for National Statistics recently announced that the unemployment rate was reduced to 7.8% from 7.9%. In your opinion, which type of unemployment is responsible for this reduction? Explain your answer.(20...
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