Chapter 8: Q 23 (page 214)
What forces create the natural rate of
unemployment for an economy?
Short Answer
the long term trends of unemployment are determined by Natural rate of unemployment which reflect structural and frictional unemployment.
Chapter 8: Q 23 (page 214)
What forces create the natural rate of
unemployment for an economy?
the long term trends of unemployment are determined by Natural rate of unemployment which reflect structural and frictional unemployment.
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correlated with the level of economic activity, in the real world it responds with a lag. In other words, firms do not immediately lay off workers in response to a sales decline. They wait a while before responding. Similarly, firms do not immediately hire workers when sales pick
up. What do you think accounts for the lag in response time?
Name and explain some of the reasons why wages are likely to be sticky, especially in downward adjustments.
When would you expect cyclical unemployment to be rising? Falling?
How do you calculate the unemployment rate? How do you calculate the labor force participation rate?
Is the higher unemployment rates for minority workers necessarily an indication of discrimination? What could be some other reasons for the higher unemployment rate?
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