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Chapter 8: Q 31 (page 215)

Is a decrease in the unemployment rate necessarily a good thing for a nation? Explain.

Short Answer

Expert verified

Unemployment rate depicts percentage of individuals unemployed in total labor force.

Step by step solution

01

Step 1. Definition

Unemployed people: People who are looking for job but are not able to find it.

02

Step 2. Discouraged workers

Those workers who are eligible for jobs but have they have stopped looking for job because they might not find suitable options they are looking for.

03

Step 3. Reason

Increase in unemployment does not always means country is not doing good. Discouraged workers are not considered as unemployed nor they are included in labor force. So despite of bad economic conditions unemployment rate will fall.

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Most popular questions from this chapter

Why is there unemployment in a labor market with flexible wages?

What type of unemployment (cyclical, frictional,

or structural) applies to each of the following:

a. landscapers laid off in response to a drop in new housing construction during a recession.

b. coal miners laid off due to EPA regulations that shut down coal fired power

c. a financial analyst who quits his/her job in

Chicago and is pursing similar work in Arizona

d. printers laid off due to drop in demand for printed catalogues and flyers as firms go the internet to promote an advertise their products.

e. factory workers in the U.S. laid off as the plants shut down and move to Mexico and Ireland.

Many college students graduate from college before they have found a job. When graduates begin to look for a

job, they are counted as what category of unemployed?

What forces create the natural rate of

unemployment for an economy?

While unemployment is highly negatively

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?

See all solutions

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