Answer to Question #239175 in Economics for vibha

Question

3. In each of the following scenarios, which type of unemployment would change (if any) and in what direction? Which of these scenarios would be most likely to reduce frictional unemployment? 

A. The government eliminates the minimum wage.

B. The government increases unemployment insurance benefits.

C. A new law bans labor unions.

D. More workers post their resumes at Monster.com, and more employers use Monster.com to find suitable workers to hire.

E. Sectoral shifts become more frequent

Answer 1

A. Government abolishes minimum wages. Unemployment is declining, but equilibrium wages are sharply reduced.

B. Government increases unemployment insurance benefits. Voluntary unemployment is on the rise.

C. New law bans trade unions. Structural unemployment is increasing.

D. More employees are posting their resumes on Monster.com, and more employers are using Monster.com to find the right people to hire.

Frictional unemployment is on the rise as many employees want to improve conditions and pay.

E. Sectoral shifts are increasing. Cyclical unemployment is on the rise.