Question

A key reason that unemployment in the United States is so low compared to most of Europe is because of ________ unemployment.

	a.	no structural
	b.	low frictional
	c.	no cyclical
	d.	high structural
	e.	low structural

If the monopsony model assumptions hold as predicted::

	a.	the classical model of no actual involuntary unemployment is true.
	b.	a minimum wage can increase both wages and employment.
	c.	minimum wages are ineffective at raising entry level wages.
	d.	a minimum wage always creates unemployment and is harmful to the economy.

Answer 1

Answer : Option C is correct. A key difference between the unemployment rate between USA and the Europe that there is no cyclical unemployment as there is no economic downturn and creation of the job is maximum level.

Answer : Option B is correct. If the monopsony model assumptions hold as predicted a minimum wages can increase both wages and employment. It means that minimum wages can be option available as there is single buyer or employer in an input market (Labour market) as predicted .