Assume that the government reduces the level of unemployment compensation.
How would this affect the natural rate of unemployment ( if possible explain why) ?
How would this affect the long-run phillips curve ?
Unemployment Economics Q?
the rate of unemployment would decrease, because the unemployed would be encouraged to work as their %26#039;income%26#039; is being reduced. but the decrease depends on how much the compensation is being reduced. there will still be a small percentage of the population being unemployed because of frictional unemployment. the long run curve will shift out to the right as the supply of labour increases.
im sorry if i didnt explain it well havent touched econs in a long time. %26gt;.%26lt;
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