Page 122 - Macroeconomics. book docx_Neat

- Recognize the role of economic policies in addressing these problems.

Key Terminology

Unemployment – Inflation – Recession – Economic Growth – Budget Deficit – Public

Debt – External Debt – Fiscal Policy – Monetary Policy – Economic Stability

1. UNEMPLOYMENT

Meaning of Unemployment

Unemployment occurs when individuals who are able and willing to work at the

prevailing wage rate cannot find jobs. In macroeconomics, unemployment is considered

one of the most serious problems because it represents unused labor resources in the
economy.

Unemployment is not only an economic problem but also a social problem, as it affects

income distribution, poverty levels, and social stability.

Types of Unemployment

1. Frictional Unemployment: Temporary unemployment that occurs when workers

move between jobs.

2. Structural Unemployment: Occurs when workers’ skills do not match available jobs
due to technological or structural changes.

3. Cyclical Unemployment: Results from economic downturns or recessions.

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