Chapter 16, Question 5
Frictional unemployment is important to have in the economy because it allows individual with skills and competences a better opportunity at finding jobs. Frictional unemployment is important because it matches the demand for employees with supply and brings stability in the labor market. (Goodwin N.) Frictional unemployment only assists those who are jobless and are looking for work. Those that are employed and are looking for a new job are not counted under frictional unemployment. Frictional unemployment exists due to the disparity between characteristics of supply and demand job markets. Some of the characteristics of disparity are skills, locations, attitudes, payments, work timing and more. (Farnham P.)
Frictional unemployment is established in a rapid-pace economy that is flexible, expanding and adaptable within the work force. Most economists believe that frictional unemployment is a sign of economic well being. Frictional unemployment supports employees as they allow them to seek jobs they like best. (Goodwin N) Frictional unemployment benefits the employers by allowing them the opportunity to select among the most talented. Frictional unemployment is mainly for individuals that are just leaving college and those that are unemployed due to changing of jobs.
Frictional unemployment decreases the availability of talent to companies, and gains in turnover, but losses to productivity and the economy as a whole. When individuals delay re-entering the work force causes the frictional unemployment to fall into a negative status. Frictional unemployment is current because there is inadequate information in the labor market and employees have to seek employment that meets their requirements.

Chapter 16, Question11
Whenever unemployment is the topic of a discussion we only think about those that have been affected by unemployment, such as, those that are laid off, terminated by their employer, or job lost due to closing of the manufactures. Most of us never think about what unemployment really means and how unemployment operates. Unemployment ranks are on the rise, therefore, we all should examine unemployment.
Unemployment has been divided into three types: frictional, structural and cyclical. Unemployment was divided to assist the government agencies with calculating the numbers of the unemployed. Also, the dividing of unemployment assist the economist understands what causes individuals to become unemployed. Some reason that may cause unemployment is due to recession and the gap within supply and demand, financial crisis, and economic depression.
Frictional unemployment is caused by a temporary transition by employees and employers with partial or conflicting information. Frictional unemployment take affect because workers may not accept the first job offer because of the wages and necessary skills. Frictional unemployment also takes affect because of failing firms, poor job performance, or outdated skills. Another reason frictional unemployment takes affect is because individuals decide to quit their jobs to move to different parts of the country. (Deardoff A.)
Structural unemployment occurs when there are changes within the economy. Structural unemployment is caused due by difficulty in moving to a new location or work industry. Structural unemployment takes affect because of the rise in the mismatch needs of employers, skills, and training of the labor industry. Structural unemployment takes affect when there is improvement in the technology due to a person work is no longer required. Structural unemployment usually occurs when individuals does not want to change location.
Cyclical unemployment occurs when there is a recession. Cyclical unemployment is caused by a turndown in the economy. During the time of a recession, unskilled and surplus labors are unemployed. Also, during the time of a recession unemployment rates rises and the job market and economic climate changes over a period of time. Whenever there is a recession, supplies and demands decrease which causes a demand for labor to decrease. When cyclical unemployment arises there is an increase in job lost within the industry. Cyclical unemployment data are known as Keynesian unemployment data. Cyclical unemployment can affect both the globe economy and the country.
Chapter 26, Question 8
Our country uses two major types of exchange rate systems they are flexible and fixed. A flexible exchange rate determines the interaction of the supply of and the demand for currencies. (Farnham P.) Flexible exchange rate means that a net surplus cannot arise in the overall balance of payment account. In other word, any deficit in the current account must be matched by a corresponding surplus in the financial account. (Farnham P.) With a flexible exchange rate there is not intervention by the central bank of any country in order to influence the level of the exchange rate. (Farnham P.) Flexible exchange rate changes within the demand and market supply of a currency causes a change in value. A flexible exchange rate allows more opportunity to plan in a variety of ways. Flexible exchange rate leaves the establishment free to allow inflation to increase. Whenever the exchange rate is flexible it will be determined by the market forces which are known as the supply and demand. Just like all other markets, a flexible exchange rate is changing at all times. A flexible exchange rate changes to reflect how much of the currency is being traded. With the flexible exchange rate, the central banks sometimes get involved when necessary to avoid inflation.
A fixed exchange rate is when the central banks of various countries intervene in the foreign exchange market to maintain or stabilize currency exchange rates. (Farnham P.) Fixed exchange rate means that payment surplus can arise in the balance payment accounts because there is disequilibrium in the foreign exchange market. External forces are attempting to alter exchange rates through shifts in the demand for and supply of currencies, while police makers are attempting to hold the exchange rates constant. (Farnham P.) On a fixed exchange rate the government must intervene to maintain the fixed rate. When fixed exchange rates are maintained, inflation is restrained. A fixed exchange rate gives more assurance for exporters and importers and usual there is little to no speculative activity. Fixed exchange rates often enforce a tight control on capital flow to and from countries with fixed exchange rates economy. Imposing a tight control on the capital flow will assist the government and the central bank by limiting inflows and outflows of currency that might weaken the fixed exchange rate target.

Reference
Farnham, Paul Economics for Mangers, Second Edition