Future Business Leader Achievments (FBLA) Economics Practice Exam

Structural unemployment occurs when?

1. Aggregate demand is too low.

2. The jobs that are available require skills that people looking for work don't have.

3. Lifeguards lose their jobs when summer is over.

4. None of these

The correct answer is: The jobs that are available require skills that people looking for work don't have.

Structural unemployment arises from a mismatch between the skills that workers possess and the skills required for available jobs in the labor market. This type of unemployment is often the result of changes in the economy, such as technological advancements, shifts in consumer demand, or globalization, which can render certain skills obsolete. As a result, individuals may find themselves unemployed because they lack the specific qualifications or training that the new jobs demand. In this context, when job openings exist but the workforce does not have the necessary skills to fill those roles, structural unemployment is created. This distinguishes it from other forms of unemployment, such as cyclical unemployment, which is tied directly to the overall economic cycle and aggregate demand. Seasonal unemployment, like that experienced by lifeguards when summer ends, is also not classified as structural, as it is temporary and cyclical in nature. Therefore, the definition provided regarding the presence of available jobs requiring skills that potential employees do not possess correctly identifies the essence of structural unemployment.