Structural unemployment results when A. the introduction of a product substitute
ID: 1133459 • Letter: S
Question
Structural unemployment results when
A.
the introduction of a product substitute leads to a large decline in the market demand for a product so that workers specializing in the production of that product find themselves out of work.
B.
individuals enter the labor market in June following graduation.
C.
a reduction in consumer income reduces demand for products.
D.
workers face layoffs following a decrease in economic activity.
Consider the following table Real GDP (billions of dollars per year, in constant 2009 dollars 14,873.7 14,418.7 15,020.6 15,583.8 16,341.8 17.136.7 Nominal GDP (billions of dollars perPrice Index Year 2007 2009 2011 2013 2015 2017 14,477.6 14,418.7 15,517.9 16,663.2 17,937.8 19,319.0 (base year 2009) 97.337 100.000 103.311 106.926 109.766 112.735 Change the base year to 2007 in the above problem. Recalculate the price index and then recalculate real GDP for the years in the table below. (Enter your responses for price index rounded to three decimal places and for real GDP rounded to one decimal place.) Real GDP Price Index (billions of dollars per year, in constant 2007 dollars Year(base year 2007) 2007 2009 2011 2013 2015 2017Explanation / Answer
1. Structural unemployment occurs due to skills gap, i.e. mismatch between skills that unemployed workers have and skills demanded of workers by employers. It often occurs when the demand for specific type of Labor changes as the economy changes.
Here, with the introduction of a product substitute causes many workers who were specializing in the production of that product to lose their job. Demand for these workers decreases as they don't have the skills to produce the substitute goods or what the employers require now. This unemployment because of the mismatch between skills is an example of structural unemployment.
Answer : Option A