Question

In Alexland there are 70,000 people employed and 10,000 people who are unemployed. Of those 10,000 2,000 are structurally unemployed and 1,000 are frictionally unemployed. This economy would be described as:

growing.

contracting.

constant.

Need nominal gdp data to determine level of growth.

Answer 1

Structural unemployment is due to the structural changes in the economy and the frictional unemployment is due to period between change in job or change in place. However, both the types of unemployments are seasonal. It can be changed and not a permanent one. Structural unemployment shows that there are many changes in the economy and developments which forces people to learn and then come back to employment and frictional unemployment suggests that more and more promotions and transfers are happening which again is a sign of growth. So both these fiigures can be converted into employment in some time.

Thus, the economy can be described as an growing one.