MADELINE KIMBERLY PART A Graph: tier 1: Under 16 or institutionalized tier 2: Not in labor force tier 3: Employed tier 4: Unemployed tier 3 + tier 4 = labor force 1. Labor force = Employed + Unemployed = 139.1 + 14 .6 = 153.7 million 2. Not in labor force = Total population – Labor force – under 16 or institutionalized = 307 – 153.7 – 69.3 = 84 million 3. Unemployment rate = Unemployment / Labor force * 100 = 14.6 / 153.7 * 100 = 9.50% PART B 1. Structural, the farmer needs to be retrained or obtain an education to work in another industry because his line of work is no longer needed so this fits into structural. 2. Frictional, this person is between jobs so the person is only temporarily unemployed but can get obtain another job in the same line of work so it’s fricitonal. 3. Cyclical, the person is unemployed due to recession and demand decreasing and so people are not spending much which fits into cyclical unemployment 4. Frictional, this graduate is only temporarily out of a job but is actively looking for one so it’s frictional unemployment. 5. Cyclical, this person is not unemployed because his skills are obsolete but it’s because there is not enough demand that his skills are needed due to the free trade in US. 6. Frictional, this person is between jobs, she voluntarily left and she knows she’s going to get another job soon so this person is experiencing frictional unemployment. 7. Structural. The seamstress said that the demand for her work is declining, most likely because everyone is using technology to sew, which would mean that she needs further education or training so she can find work in another industry. 8. Cyclical, this person was laid off because the retail sales decreased. Since retail is a very large industry, the reason behind it would be because people are starting to spend less so this would mean the person is experiencing cyclical unemployment. 9. Structural, this person’s skills are obsolete due to the robots so he needs to retrain or get more education so that he can use what he learned to find another job as what he knows now is not being used anymore so this is structural unemployment PART C 1. Yes, the low unemployment rate in the US is understated. I think that this number is understated because the US only counts people that are not working but actively looking for a job to be unemployed. Their unemployment measures do not take into account workers that want to work but have been searching for so long they are not currently, actively seeking work, or in other words the discouraged workers. Not to mention the workers that are part time, some of these workers might actually be wanting full time jobs and this means they have not achieved full employment. The unemployment measure mostly only bothers with lowering the quantity but it does not take into account the actual people. So, the unemployment rate would be much higher if all these people were included. 2. A low unemployment rate would mean that everyone is getting a steady income which would push for higher demand and would eventually cause inflation because there’s too much demand and not enough supply. Because more workers are hired, the average total cost of production will increase thus leading to higher prices (inflation). The inflation may then lead to a recession. The higher prices would cause a decrease in demand, as people are less likely to spend and eventually supply would also decrease, so a decrease in GDP, and this will lead to a recession, leading to a worse off economy. Just like the case of the 2006 market crash, due to a high supply but nobody demands the supply, the market crashed. As a recession progresses, this means total output decreases so less labor is needed to produce a lower amount of output, thus leading to very high unemployment throughout the economy. In the same 2006 market crash, high unemployment lingered for years after the market crash.
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