IAI Actuarial Core Principles · Business Economics · Impact of the macroeconomic environment on business
A steel firm in India lays off workers because a new automated plant requires fewer people with different skills, even though the economy overall is growing. Which type of unemployment does this best illustrate?
This is structural unemployment. Automation changes the skills the firm needs, creating a lasting mismatch between workers' skills and available jobs even while the economy grows, so it is not cyclical, frictional or seasonal unemployment.
- ACyclical unemployment
- BFrictional unemployment
- CStructural unemploymentCorrect
- DSeasonal unemployment
- Voluntary unemployment due to high benefits
Explanation
Technological change creating a mismatch between workers' skills and available jobs is structural unemployment. Cyclical unemployment arises from deficient demand in a downturn, which is absent as the economy is growing. Frictional involves short job searches.
Did you get it right without looking?
One question tells you little. A timed set on Impact of the macroeconomic environment on business shows your real accuracy, how long you take and where you lose marks.
More Impact of the macroeconomic environment on business questions
- Which statement best describes how a rise in domestic interest rates, relative to those abroad, typically affects the exchange rate and net …
- Which of the following is an example of structural unemployment?
- The Reserve Bank of India raises its policy repo rate and banks pass the increase on to borrowers. Which effect on a highly geared Indian re…
- An economy has potential output of ₹500 thousand crore and actual output of ₹520 thousand crore. Which of the following is the most consiste…
- Indian one-year interest rates are 7% and US one-year rates are 3%. Under uncovered interest rate parity, with the spot rate at ₹80 per doll…
- A country's economy moves from the 1970s style of stagflation to a period where the central bank adopts a credible inflation target. Which s…