Question

Godland is an emerging economy. This table shows selected labor statistics during the period 1998 - 2018: 1998 2018 Total Labor Force 1,000,000 1,200,000 Employment level - Primary sector 50,000 20,000 - Manufacturing sector 800,000 900,000 - Service sector 50,000 100,000 - Overall 900,000 1,100,000 Estimated natural rate of unemployment 10% 12% Average duration of unemployment 2 weeks 20 weeks Proportion of union member 10% L 40% a. In what way is Godland facing a frictional unemployment? Structural unemployment? How do these changes contribute to the natural rate of unemployment of Godland in the past two decades? Explain using the figures from the table. (Hint: Calculations are not essential. More important, interpret and compare relevant figures reasonably.) (9 marks) b. A legislator suggests increasing the government spending on public housing to help reduce the natural rate of unemployment in Golland. Explain why this suggestion will not be successful. (3 marks)

Answer 1

(a) Frictional new any economy from one dland Frictional Unemployment is that unemployment which exists in any economy due to people, being in the process of moving from one jos. to another and in the case of the Godland we can see the figures i.e in the primary sector in 1998 was 50,000 and int reduces to the 20,000 it means people became unemployed and we can see that no. of people in service sector increase means people have shifted from one sector to other and because of this shifting in between they stay (get) Unemployed and as the population from 1998 to 2018 also increased so No. of people get engloyed should be doubled - triple but it does not to, it means people get unemployed Structural Unemployment - is unemployment resulting from industrial reorganization, typically due to technolopical change rather than Eluctuations in supply or demand and this iſ also very there in case of the Godland we can see that no. of people get employed un I service sector increased from 150,000 to I $ 100,000 which shows that there were opportunities Temerged in the service sector means some Technologia change definetly happened, and as it is true also that Godland had introduced many new, technologies, & incustrial reorganisation alsof happened as well so, These Both fachow does apped the Naturel Rate & Unemployment as Natural rate of Cheuphy -ment is a combination of frictional and structural Unemployment that persist in an efficient, expanding economy.

Increasing the government spending on the public housing does not help in reducing the natural rate of Unemployment in qodland Because Public housing spending means that gout give loans to decent & safe rental housing for eligible low-income familie elderly puson & disabiline . It comes in all sizes, types from scattered single family houses to high rise apartments for elderly familie By doing this investment the gut will only pomote one type of investment which is on housing and it does not being a large amount J Omy loyment in the Econong as it is one time creating engloyment Economy need a big push and inverment in all sectors, and money should be given to those who can do investment again & again, in the Elonany.