Module13: The Causes and Categories of Unemployment

Which pair of policies is likely to have the effect of reducing the natural rate of unemployment?

• Job training and employment subsidies

• High minimum wages and generous unemployment benefits

• Job training and higher minimum wages

• Employment subsidies and policies designed to strengthen labor unions

If the actual unemployment rate is 7% and the cyclical unemployment rate is 2%, then the natural rate of unemployment is:

• 2%.

• 5%.

• 7%.

• 9%.

What factors determine the natural rate of unemployment?

What is frictional unemployment?

Why is there always some frictional unemployment?

(a)   unemployment occurs when workers lack the skills for available jobs, or when job-seekers outnumber the jobs available at the current wage.

The causes of structural unemployment are: (a)  

(a)   unemployment is the deviation of the actual unemployment rate from the natural unemployment rate.

Cyclical unemployment is caused by (a)   .

What can change the natural rate of unemployment?