Question 1&2: how would each of the following likely affect the natural unemploy

Question

Question 1&2: how would each of the following likely affect the natural unemployment rate? (increase, decrease, remain the same)

1. a new market service that makes it easy for people to check on availability of jobs around the country _______.

2. the length of time that unemployed workers can receive government benefits increases from six months to one year ________.

Question 3: if the natural rate of umployment is 4% and the actual rate of unemployment is 7% according to Okun's Law how much GDP is lost if the potential (full employment) output is $19,000 billion? GDP loss equals ______

Question 4: name on group of people in society that would lose if there was unanticipated inflation and brief reason.

Question 5: if the nomial interset rate on a money loan was 7% and the consumer price index is 105 and the inflation rate is 4% then the real burden of the moeny loan is ____________.

Explanation / Answer

Question 1

Natural unemployment consist of frictional unemployment and structural unemployment.

The introduction of a new market service that makes it easy for people to check on availability of jobs around the country will contribute towards the reduction in frictional unemployment.

Decrease in frictional unemployment will lead to the decrease in natural unemployment.

So, the natural unemployment rate would decrease.

Question 2

Natural unemployment consist of frictional unemployment and structural unemployment.

The length of time that unemployed workers can receive government benefits from six months to one year will induce people to devote more time to search jobs. This will increase frictional unemployment.

Increase in frictional unemployment will lead to increase in natural unemployment.

So, the natural unemployment rate would increase.

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