Question

Explain the difference between frictional and structural unemployment.

What is a business cycle?

Answer 1

Frictional unemployment is when a person in the workforce is unemployed because he is looking for a new opportunity i.e. a new job, all this while he is searching for the new job in the market. We can say that this is the difference between the new job and the date of leaving the old job in the market.

Structural unemployment is when the person doesn't have the relative skill in the market to get employed like lot of typewriters lost job after computers came in the market, to get the job they will have to update the knowledge or their skills in the market.

Business cycle is increasing and decreasing of the output in the market and it doesn't follow any periodic changes. if threre is a boom then next there will be bust but the time line in the market is uncertain.