Question

All else equal, how will increasing unemployment insurance affect the natural rate of unemployment?

The natural rate of unemployment is likely to decrease.

The natural rate of unemployment will remain unaffected.

The natural rate of unemployment is likely to increase.

From the following examples, select the example illustrating frictional unemployment.

Winny is annoyed with her manager at the Tasty Freeze where she has worked all summer. She decides one day just to not go to work anymore and instead goes on a trip with a friend.

A city has been hit hard in the recession and the largest construction company lets go of 300 construction workers.

Justin works at an oil rig in Texas. He sees a better opening at a company in North Dakota and applies for the job. After he accepts their offer and quit his job, he takes a month to pack up and move to North Dakota. If the economy was running with ideal conditions, inflation wouldn’t be blurring the price signals. If prices and wages rise at a consistent 15% then people could shift their expectations. As an example, if the price of eggs increased by 15% and the price of the input chicken feed also rose by 15%, the sellers should know that the real price of eggs has not changed. The market equilibrium price and quantity has not changed. In the real world why does inflation actually result in shortages and surpluses? Sellers care more about nominal prices than real prices of goods. The changes to prices are not smooth or synchronized. Input prices are rarely affected by inflation.

Answer 1

Ans

1 it is likely to increase because some people prefer to get unemployment benefits which are now enough for them rather than working

2 Justin..... Because here unemployment is due to switching of jobs

3 The change to prices are not synchronized.... This is one of the primary reasons mentioned by economists