Question

7. Even under the best of times, the unemployment rate never drops to zero because: (a)...

7. Even under the best of times, the unemployment rate never drops to zero because: (a) such a drop would cause deflation; (b) there will always be children and retirees unwilling to work; (c) structural unemployment can never be zero; (d) workers at the unemployment offices would get very upset.

Homework Answers

Answer #1

Even in the best of times, the Unemployment Rate never drops to zero because of the presence of structural Unemployment. Structural Unemployment is the Unemployment caused due to industrial reorganization and technological change(which occurs continuously). Structural Unemployment, therefore, can never be zero. Thus, there is always some Unemployment in the Economy. So, even under the best of times, the Unemployment Rate never drops to zero because structural Unemployment can never be zero.

Thus, Option c is correct.

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