CFA Practice Question

CFA Practice Question

Which of the following types of unemployment is most likely to be associated with an economy in which many workers have been made obsolete by changing technology?
A. Cyclical.
B. Structural.
C. Frictional.
Explanation: Structural unemployment results from changes in the basic characteristics of the economy; available jobs generally require skills that differ from the skills of unemployed workers.

User Contributed Comments 1

User Comment
thebkr7 - Structural Unemployment - Changes occur in market economies such that demand increases for some jobs skills while other job skills become outmoded and are no longer in demand. For example, the invention of the automobile increased demand for automobile mechanics and decreased demand for farriers (people who shoe horses).

- Frictional Unemployment - This type of unemployment occurs because of workers who are voluntarily between jobs. Some are looking for better jobs. Due to a lack of perfect information, it takes times to search for the better job. Others may be moving to a different geographical location for personal reasons and time must be spent searching for a new position.

- Cyclical Unemployment - This occurs due to downturns in overall business activity.
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