Question

5. A structural economic shock hits the labour market without affecting the natural rate of unemployment. Select the option that is consistent with this scenario. b. Unemployment benefits coverage rate decreased and the government takes new anti-trust measures market. d. Liberalization of the labour market, by dismantling the collective bargaining process, and mitigation of anti-trust regulation.

PLEASE ANNSWER AND EXPLAIN THE CORRECT AND THE INCORRECT POINTS THANKS

Answer 1

When a structural economic shock hits the labour market, without affecting the natural rate of unemployment, then, this will lead to the liberalisation of the labour market by dismantling the collective bargaining process, and mitigation if anti trust laws. This will help to increase more number of labourers in the market. This availability of labourers will lead to an increase in the supply of labourer, thus the cost of labour will reduce. Reduced labour cost will lead to an increase in the production of goods and services.

Unemployment benefits coverage decrease and the introduction of new anti trust laws by government will also enable the more number of labourers in the market.