Structural unemployment—the unemployment that remains even at the peak

Thank you. Yeah it's C. completely spaced out today lol.

Can anyone please explain the 2nd question? Am I missing anything from the passage?



I chose B because of the 1st sentence of the 2nd para.

Hi Nis20,

Question 2: The passage suggests that a potential outcome of higher structural unemployment is



In the above question we are asked a potential outcome of higher structural unemployment and not a major factor in producing structural unemployment. Thus, Option B is incorrect.

Option C can be inferred from the lines: "Increased structural unemployment, should it occur, makes it difficult for the economy to achieve desired low rates of unemployment along with low rates of inflation. If there is a growing pool of workers who lack the necessary skills for the available jobs, increases in total labor demand will rapidly generate shortages of qualified workers. As the wages of those workers are bid up, labor costs, and thus prices, rise. "

Hope this Helps.
Thanks.

Total time taken 7 min,07 sec including both, passage reading and selection of answer option.
All correct. Very good passage.

Thanks!!
Jyotirmay
(12th standard student, preparing for CLAT)

KarishmaB Pls explain Q6 - B and D. I also do not understand how attrition can be a reason for no unemployment? Rather attrition should be the reason for the same. And so what if "normal attrition is sufficent to reduce the size of workforce?" Well that us a bad thing that attrition is sufficient to reduce the size of workforce because that is what is causing unemplyment

Q 6
According to the passage, small downward shifts in the demand for labor will not usually cause unemployment because

A. such shifts are frequently accompanied by upswings in the economy
B. such shifts usually occur slowly
C. workers can be encouraged to move to where there are jobs
D. normal attrition is often sufficient to reduce the size of the work force
E. workers are usually flexible enough to learn new skills and switch to new jobs


While technological advance almost invariably results in shifts in demands for different types of workers, it does not necessarily result in unemployment. Relatively small or gradual changes in demand are likely to cause little unemployment. In the individual firm or even in the labor market as a whole, normal attrition may be sufficient to reduce the size of the work force in the affected occupations.

This is what is given to us about "small shifts in demand". It doesn't cause unemployment. Normal attrition is sufficient to reduce the size of work force in the affected occupations. It means that if demand decreases a bit in certain occupations, normal attrition is enough to take care of it without the need to remove people from jobs. Normally, people keep moving from one job to another. In occupations where demand decreases slightly, once someone quits, a new person will not be hired. So no one will need to be fired. Hence normal attrition will take care of the small decreases in demand.

AndrewN

Since, I see that you were active on this form, I would be so appreciative to learn of your thoughts on the following:
For "it can be inferred from the passage that even when there are unemployed workers, labor shortages are still likely to occur if" For choice C, is "exceptionally low" what makes this answer choice incorrect?  The passage defines structural unemployment as this imbalance and with this imbalance, labor shortages MAY occur. I am just confused because the passage does not seem to explicitly say that there is a correlation in a certain direction at all (e.g., less structural unemployment = less imbalance or more structural unemployment = more imbalance.)

Furthermore, what does the passage mean by "capital movement"?

Thank you for your time.

KarishmaB
I am not sure if Andrew is still active. I see that you recently weighed in. I would be so appreciative to learn of your thoughts. Thank you for all of your help. My big exam day is in two days.... almost at the finish line

RC00144-06
The passage suggests that the phenomenon of combined unemployment and inflation is

A. a socioeconomic problem that can only be addressed by government intervention
B. a socioeconomic problem that can be characteristic of periods of structural unemployment
C. an economic problem that results from government intervention in management-labor relations
D. an economic problem that results from imperfect applications of technology
E. an economic problem that can be eliminated by relatively small changes in the labor force

Although I marked the correct option for this question, I did that using POE.

Lately I am trying to emphasize more on the exact/correct reasons to not select an incorrect answer choice and select a correct answer choice.
Can experts GMATNinja RonTargetTestPrep KarishmaB help me on the my understanding ?

A. a socioeconomic problem that can only be addressed by government intervention
The word "ONLY" is a strong word. Although the passage mentions that govt is doing something for the inflation, but it is nowhere mentioned that it is the only thing to tackle the problem.
B. a socioeconomic problem that can be characteristic of periods of structural unemployment
a socioeconomic problem - "phenomenon of combined unemployment and inflation"
I do not understand - "characteristic of periods of structural unemployment" from the question stem. What exactly does it mean ?
Does it mean that the whenever structural unemployment occurs (at different times/periods) , it also causes inflation ?
C. an economic problem that results from government intervention in management-labor relations
Govt intervening in labor management has not be mentioned in the passage.
D. an economic problem that results from imperfect applications of technology
The first sentence of the 2nd para states - "technological change is a major factor in producing structural unemployment."
The question asks about both - "phenomenon of combined unemployment and inflation".
Technology definitely causes some unemployment , but we can't be sure that this also cause the inflation.
E. an economic problem that can be eliminated by relatively small changes in the labor force
Not sure if changes in labor force will definitely help with tackling the inflation issue.
May be it does , but the inflation can still be caused by some reasons other than unemployment.

Look at the last paragraph:

Increased structural unemployment makes it difficult for the economy to achieve low unemployment along with low rates of inflation. If there is a growing pool of workers who lack the necessary skills for the available jobs (i.e. if there is structural unemployment), increases in total labor demand will ... and thus prices, rise. This phenomenon may be an important factor in the rising trend of unemployment combined with inflation. Government policy has placed a priority on reducing inflation, but these efforts have nevertheless caused unemployment to increase.


A period of structural employment can have unemployment + inflation at the same time.

Normally, one would expect that when economy does well, unemployment is low but because people have more money and they spend more, inflation increases.
When economy doesn't do well, unemployment is high but inflation is low.

So one would normally expect that if one of them is high, the other is low. But periods of structural unemployment could have inflation too.

The paragraph also mentions that Govt has tried to control inflation but that has made unemployment worse. So even the Govt hasn't been able to resolve this issue. Whether it can be addressed in another way, we don't know.

Answer (B)

I think AndrewN is active in the forum but since your exam is coming up (Best wishes!), here is my analysis:

RC00144-05
It can be inferred from the passage that even when there are unemployed workers, labor shortages are still likely to occur if

A. the inflation rate is unusually high
B. there is insufficient technological innovation
C. the level of structural unemployment is exceptionally low
D. the jobs available in certain places require skills that the labor force in those areas lacks
E. the workers in some industries are dissatisfied with the pay offered in those industries


In usual circumstances, we expect that either there is unemployment or there is shortage of labour, not both.
Shortage of labour means jobs available but people not available. Unemployment means people available but jobs not available.
So if there is unemployment, people are available and if there is shortage of labour, jobs are also available - then you would match the two and both issues will get resolved.

Why would both issues persist? If the jobs available do not match the people available i.e. the skill required is not possessed by people in that area.
Hence (D) is correct.

What is structural unemployment? That technology advanced and made people with certain skills redundant and hence created unemployment. The advanced tech also created a requirement for a certain skill that people in the area do not possess so it created labour shortages also.
Hence, in areas of high structural unemployment (say major upgrade in tech), we will find that unemployment and shortage of labour co-exist.
Option (C) says the opposite "the level of structural unemployment is exceptionally LOW." This is incorrect.

Capital movement is the movement of money that is invested. If a place has high structural unemployment, the new capital investments (new tech, upgrades etc.) can be avoided in those areas and instead can be diverted to areas where people with relevant skills live.

KarishmaB

According to the passage, small downward shifts in the demand for labor will not usually cause unemployment because
Please help me to understand logic for D.

small shifts in demand will not cause unemployment. How?
If a person quits, he/she is unemployed. So how come attrition does not lead to unemployment.

Attrition could be people leaving on their own or fired by the company.

Thank you for your help!

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