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Chapter 7: Q.2 For critical thinking (page 158)

Why do you suppose that some economists argue that if part-time employment rises while unemployment remains unchanged, the economy has moved further from full employment?

Short Answer

Expert verified

Some economists argue that if part-time employment rises while unemployment remains unchanged, the economy has moved further from full employment as it will diminish compulsory unemployment in the short run.

Step by step solution

01

Introduction

Assuming that part-time employment rises, it will diminish the compulsory unemployment in the short-run, yet unemployment or normal pace of unemployment or the pace unemployment will continue as before over the long haul.

02

Explanation

A lessening in compulsory unemployment in the short run will cause an ascent in expansion. The expansion will expand the expense of creation and again loss of employment will start. Subsequently, greater unemployment will move us further from full employment over the long haul when part-time employment rises.

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Most popular questions from this chapter

Suppose that among the 15 million unemployed people in Problem 7-17, currently, 6.9 million are frictionally unemployed, 5.9 million are cyclically unemployed, and 2.2 million are structurally unemployed. What is the natural rate of unemployment?

Suppose that you are given the following information:

a. If the labour force participation rate is 65 per cent, what is the labour force?

b. How many workers are employed?

c. What is the unemployment rate?

This year is the base year for computing the nation's price index. The current nominal interest rate is 6 per cent, and the real interest rate is 3.5 per cent. What is the anticipated value of next year's price index?

During the course of a year, the labour force consists of the same 1,000 people. Employers have chosen not to hire 20 of these people in the face of government regulations making it too costly to employ them. Hence, they remain unemployed throughout the year. At the same time, every month during the year, 30 different people become unemployed, and 30 other different people who were unemployed find jobs.

a. What is the frictional unemployment rate?

b. What is the unemployment rate?

c. Suppose that a system of unemployment compensation is established. Each month, 30 new people (not including the 20 that employers have chosen not to employ) continue to become unemployed, but each monthly group of newly unemployed now takes two months to find a job. After this change, what is the frictional unemployment rate?

d. After the change discussed in part (c), what is the unemployment rate?

In a country with a labour force of 200, a different group of 10 people becomes unemployed each month but becomes employed once again a month later. No others outside these groups are unemployed.

a. What is this country's unemployment rate?

b. What is the average duration of unemployment?

c. Suppose that establishment of a system of unemployment compensation increases to two months the interval that it takes each group of job losers to become employed each month. Nevertheless, a different group of 10 people still becomes unemployed each month. Now, what is the average duration of unemployment?

d. Following the change discussed in part (c), what is the country's unemployment rate?
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