What type of unemployment is best studied under the short-run framework? LO4

Name: Problem 9, Chapter 7: Macroeconomics
Uploaded: 2021-03-21T21:14:38-08:00
Duration: 3 min 20 s
Channel: Kaylee Mcclellan
Description: What type of unemployment is best studied under the short-run framework? LO4

What type of unemployment is best studied under the...

Key Concepts

Short-run Framework

The short-run framework in macroeconomics focuses on analyzing economic fluctuations over brief periods where prices and wages may be sticky or slow to adjust. This framework examines temporary deviations from full employment, exploring how short-term factors such as changes in aggregate demand and business cycles affect output and employment levels.

Cyclical Unemployment

Cyclical unemployment arises from fluctuations in the business cycle, where downturns in the economy lead to reductions in aggregate demand and temporary layoffs. It is best studied under the short-run framework because its causes are tied to transient economic shocks rather than long-term structural changes, making short-term policy interventions effective in addressing it.

Transcript

00:01 Here we're discussing unemployment and the three types of unemployment that exist.

00:05 The first type being cyclical and cyclical unemployment occurs with the business cycle essentially.

00:12 So that's the important part to remember with cyclical unemployment, that it varies as the business cycle varies.

00:18 So if the business cycle during a contraction period, we may see a bit of an economic turn down, which means firms may not be able to afford the workers they do have.

00:28 We see changes in supply and demand.

00:29 And so workers may be laid off as a result of this simply because there is no need for them at this current period of time or that they are not afforded at this period of time.

00:41 The next type of unemployment is called frictional unemployment.

00:45 Fictional unemployment is really just a natural part of being unemployed.

00:49 Essentially, it occurs when workers leave their jobs willingly.

00:53 So i would say that the important part to remember when it comes to frictional unemployment is that it's usually willful.

00:59 Now this might occur when an employee chooses to leave because they want to go elsewhere.

01:04 Maybe they need to move.

01:05 Maybe they have just simply saved up enough money where they want to take the time off in order to find a job that they're really fulfilled by.

01:13 So frictional unemployment is, it's really an okay form of unemployment if we wanted to consider it that.

01:20 It can actually sometimes be good for the economy because it allows workers to take the time that they need to find those jobs that they can be most productive at rather than staying in a job that really hinders their productivity.

01:33 Now our third and final type of unemployment is structural unemployment...

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