Question

Explain how the natural rate of unemployment may be higher in low-income countries.

Short answer

Government regulations and subsistence households

Step-by-step solution

Step 1. Define unemployment.

Unemployment refers to people who are willing and able to work but have been unable to find any work.

Step 2. Explain rate of unemployment in low-income countries.

Natural rate of unemployment may be higher in low-income countries due to the following reasons:

Due to government regulations

Due to subsistence households