1. Explain the following statements.
Frictional unemployment is higher when the pace of technological advance quickens.
When the pace of technological advance quickens, there will be higher rates of job creation and destruction as old industries disappear and new ones emerge. As a result, frictional unemployment will be higher as workers leave jobs in declining industries in search of jobs in expanding industries.
Structural unemployment is higher when the pace of technological advance quickens.
When the pace of technological advance quickens, there will be greater mismatch between the skills employees have and the skills employers are looking for, leading to higher structural unemployment.
Frictional unemployment accounts for a larger share of total unemployment when the unemployment rate is low.
When the unemployment rate is low, frictional unemployment will account for a larger share of total unemployment because other sources of unemployment will be diminished. So the share of total unemployment composed of the frictionally unemployed will rise.