Question

Exercise 2 For each of the policies described below discuss the following: (1) Will the policy...

Exercise 2 For each of the policies described below discuss the following:

(1) Will the policy affect frictional or structural unemployment?

(2) Will the policy increase or decrease the natural unemployment rate?

Policy 1: The government reduces the number of weeks of unemployment insurance that unemployed workers can receive.

Policy 2: The government rises the minimum wage.

Policy 3: The government increases spending on job‐training programs

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Answer #1

Policy 1 policy 2 and policy 3 will have no impact on natural rate of unemployment because it is affected by the economic condition of recession or boom. By the cyclical fluctuation in state of economy which is not the case in all three policies..

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