Question

Explain how “0%” unemployment may not be attainable in a vibrant economy when taking into consideration the components of unemployment, and the effects of the declining purchasing power of the dollar.

Answer 1

The zerp level of unemployment is generally not attainable in case of a vibrant economy because unemployment in the case of a vibrabt economy always constitute frictional and structural type of unemployment in the economy. In case of vibrant economy, people will be looking for new jobs and will be changing jobs and thus they will be frictionally unemployed. The workforce will also be training itself to get equippted to the new skills and thus structural unemployment will also occur in the economy. Thus, in a vibrant economy, there will be structural and frictional type of unemployment in the economy. The declining purchasing power of the dollar will also reduce demand for labor because level of production in the economy declines as demand for goods decreases in the economy.Thus, zero level of unemployment may not be attainable in a vibrabt economy.