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Chapter 21: Q 24. (page 524)

Would you expect the natural rate of unemployment to be roughly the same in different countries?

Short Answer

Expert verified

No, we can't expect the natural rate of unemployment to be roughly the same in different countries.

Step by step solution

01

Step 1. Definition

In an economy the workers may come and go and always look for a better job, the period of joblessness in which the workers are looking for a job is called the natural level of unemployment.

02

Step 2. Explanation

Different countries have different rates of natural unemployment because of the public policies they follow and other reasons.

Take an example like in a country where guaranteed unemployment insurance, welfare benefits, food, medical benefits are given to an unemployed person here the person is less likely to work because the opportunity cost of being unemployed is less. So, in this country, the natural rate of unemployment is more as compared to the country which doesn’t provide these benefits to the unemployed.

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Most popular questions from this chapter

Over the long term, has the U.S. unemployment rate generally trended up, trended down, or remained at basically the same level?

Suppose the adult population over the age of 16 is 237.8 million and the labor force is 153.9 million (of whom 139.1 million are employed). How many people are “not in the labor force?” What are the proportions of employed, unemployed and not in the labor force in the population? Hint: Proportions are percentages.

Is it desirable to pursue a goal of zero unemployment? Why or why not?

When would you expect cyclical unemployment to

be rising? Falling?

Would you expect the natural rate of unemployment to remain the same within one country over the long run of several decades?
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