ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What are the main types of unemployment? There are three main types of unemployment – cyclical, structural and frictional unemployment.

Detailed explanation-2: -Lower economic growth (GDP) – As fewer people have jobs, firms won’t be able to produce as many goods and services. As a result, the output of goods and services in the economy, GDP, will be lower. This also has an impact on government taxation and spending and will negatively affect their finances.

Detailed explanation-3: -Unemployment is caused by various reasons that come from both the demand side, or employer, and the supply side, or the worker. Demand-side reductions may be caused by high interest rates, global recession, and financial crisis. From the supply side, frictional unemployment and structural employment play a great role.

Detailed explanation-4: -Cyclical unemployment is a type of unemployment where labor forces are reduced as a result of business cycles or fluctuations in the economy, such as recessions (periods of economic decline). When the economy is at its peak or experiences continuous growth, the rate of cyclical unemployment is low.