IndividualAssignment ECO202 –Macroeconomics The assignment is worth 30% of the total unit weight. Unit: Total Weight: Instructions: 1. Students are required to cover all stated requirements, penalty...

1. Explain four types of unemployment
Unemployment can be defined as state of not employed of job seekers they are willing to work
at the prevailing wage (Mankiw, 2014). Unemployment is the situation where a person who is
willing to work at the prevailing wage rate but unable to find one. An individual is not treated
as unemployed when he or she is not willing to work at the prevailing wage rate. Unemployed
are people they actively search or look for employment at the prevailing wage rate but unable
to find a suitable job. Labour is one of the important factors of productive resources.
Unemployment of labour resource is called under utilisation of available productive resource
and the same will result achieving an output level that is less than potential level of output.
Potential output is the maximum level of output that can be produced by a country but fully
utilizing its available resources. In economics unemployment is classified as four types. They
are: Structural unemployment, frictional unemployment, Cyclical unemployment and Seasonal
unemployment. This classification of unemployment is based on the nature of unemployment.
Structural Unemployment:- This is one type of unemployment an arise on account of skill that
labour possess do not suit the skill required by the industry. This happens due to reorganization
of industries or technological changes. During the course of time the economy undergo many
structural changes that necessitate labour to acquire new skills because due to structural
changes there is structural changes in the production and manufacturing. Technological
changes demand new set of labour skill and if they do not possess the required they will render
unemployed. Therefore unemployment arise due to structural changes in the economy is
classified as structural unemployed (Case, 2016). Labour need some time to acquire skill that
necessitated by structural time and till that time they will be out of the job market.
Frictional Unemployment:-Frictional unemployment is the time spent by workers in searching
for employment for the present one. Workers and employees take some time to search for new
employment after quitting from the present job. Time takes between finding job and searching
for it the labour will be out of the job market. This types job searching unemployment is called
frictional unemployment. As the times suggest this unemployment exists for a short while.
Cyclical Unemployment: Cyclical unemployment occurs due to regular ups and downs in
business activity. This cyclical ups and downs is the major cause of increase and decrease in
unemployment. Cyclical unemployment tends occur with business cycles. When the economy
is bottom of business cycle cyclical unemployment tend to be very high and when the economy
experience peak of the business cycle cyclical employment tend to be very low.
Structural Unemployment:- This is one type of unemployment an arise on account of skill that
labour possess do not suit the skill required by the industry. This happens due to reorganization
of industries or technological changes. During the course of time the economy undergo many
structural changes that necessitate labour to acquire new skills because due to structural
changes there is structural changes in the production and manufacturing. Technological
changes demand new set of labour skill and if they do not possess the required they will render
unemployed. Therefore unemployment arise due to structural changes in the economy is
classified as structural unemployed. Labour need some time to acquire skill that necessitated
by structural time and till that time they will be out of the job market (Mankiw, 2014).
2. Explain the advantages and disadvantages of:(a) A flexible exchange rate regime (b) A fixed
exchange rate regime.
Advantage and disadvantage of a flexible exchange rate regime
Exchange rate is the value of one country’s...