Sally Wong is a resident of North and is unemployed because she lost her job in a clothing factory that closed due to international competition. Identify the type of unemployment that Sally is experiencing.

Economics For Today
10th Edition
ISBN:9781337613040
Author:Tucker
Publisher:Tucker
Chapter27: The Philips Curve And Expetactions Theory
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  1. Sally Wong is a resident of North and is unemployed because she lost her job in a clothing factory that closed due to international competition. Identify the type of unemployment that Sally is experiencing. 
  2. Identify the type of unemployment that would need to be zero in order to determine a country’s natural rate of unemployment. 
  3. Assume North’s economists estimated the natural rate of unemployment at 7%. The following table consists of the unemployment rates from a labour force survey for selected months:

 

Month

Structural

Seasonal

Frictional

Cyclical

March

3%

1%

2%

5%

April

3%

2%

3%

3%

May

3%

1%

1%

1%

 

Identify whether there was a recessionary gap or an inflationary gap in each of March, April, and May.

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