WAEC Economics 2018 Theory — Question 5

Model answer

(a) Unemployment is a situation where able and qualified people are not able to get paid employment, while underemployment is a situation where labour is being used at a wrong/below-capacity post. (b)(i) Seasonal unemployment: unemployment resulting from a fall in demand due to season, e.g. farmers being unemployed in the dry season. (ii) Structural unemployment: unemployment resulting from structural changes in the economy, e.g. workers laid off as an economy shifts from manual to digital processes. (iii) Frictional unemployment: unemployment resulting from a change of job or movement of labour from one job to another, e.g. a fresh graduate temporarily searching for their first job. (iv) Cyclical unemployment: unemployment that occurs as a result of the business cycle, e.g. workers laid off during a recession, who regain jobs once the economy recovers.