Explain the three main types of unemployment experienced within an economy. Provide at least one example demonstrating each type of unemployment. Answer in a paragraph.
The three main types of unemployment experienced within an economy are structural unemployment, frictional unemployment, and cyclical unemployment. Structural unemployment occurs when there is a mismatch between the skills and qualifications of the workforce and the available job opportunities. For example, in a technological revolution, many individuals with outdated or irrelevant skills may struggle to find suitable employment. Frictional unemployment is the temporary unemployment that occurs due to the time it takes for individuals to search and transition between jobs. An example is a recent college graduate who is actively searching for their first job but has not yet found one. Finally, cyclical unemployment is caused by fluctuations in the business cycle and happens when there is a decline in overall economic activity, leading to a downturn in job availability. A concrete example of cyclical unemployment is the layoffs that occur during an economic recession when businesses cut back on their workforce due to reduced demand for their products or services.
