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?

_____________ 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: __________________________________

_______________ unemployment is the deviation of the actual unemployment rate from the natural unemployment rate.

Cyclical unemployment is caused by ________________________.

What can change the natural rate of unemployment?