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Chapter 21: Q 24. (page 524)

Would you expect the natural rate of unemployment to be roughly the same in different countries?

Short Answer

Expert verified

No, we can't expect the natural rate of unemployment to be roughly the same in different countries.

Step by step solution

01

Step 1. Definition

In an economy the workers may come and go and always look for a better job, the period of joblessness in which the workers are looking for a job is called the natural level of unemployment.

02

Step 2. Explanation

Different countries have different rates of natural unemployment because of the public policies they follow and other reasons.

Take an example like in a country where guaranteed unemployment insurance, welfare benefits, food, medical benefits are given to an unemployed person here the person is less likely to work because the opportunity cost of being unemployed is less. So, in this country, the natural rate of unemployment is more as compared to the country which doesn鈥檛 provide these benefits to the unemployed.

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Most popular questions from this chapter

If you are out of school but working part-time, are you considered employed or unemployed in U.S. labor statistics? If you are a full-time student and working 12 hours a week at the college cafeteria are you considered employed or not in the labor force? If you are a senior citizen who is collecting social security and a pension and working as a greeter at Wal-Mart are you considered employed or not in the labor force?

What forces create the natural rate of unemployment for an economy?

Using the definition of the unemployment rate, is an increase in the unemployment rate necessarily a bad thing for a nation?

Would you expect the natural rate of unemployment to remain the same within one country over the long run of several decades?

Name and explain some of the reasons why wages are likely to be sticky, especially in downward adjustments.
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