Author Question: Starting at point B in the diagram below, identify which combinations of points illustrate ... (Read 105 times)

fahad · **on:** Jun 29, 2018

Starting at point B in the diagram below, identify which combinations of points illustrate technological change. Give a brief explanation to support your answer.

What will be an ideal response?

Question 2

What are some reasons why the unemployment rate is typically lower in the United States as compared to Canada and some Western European countries?

What will be an ideal response?

rleezy04 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The movement from B to D in the diagram illustrates technological change. Technological change is constant along a given production function. Technological change will shift the production function up as more output is produced (17,000 GDP per hour vs. 16,000 GDP per hour) with the same amount of capital per hour worked (60,000 ).

Answer to Question 2

Workers in Western Europe and Canada are eligible for unemployment insurance benefits for about twice as long as in the United States. In addition, some of the social insurance programs in these countries are more generous as compared to the United States. This makes the opportunity cost of job search lower in Canada and Western Europe, so unemployed workers in those regions will search longer for jobs. This increase in the duration of unemployment raises the unemployment rate in these countries, relative to the United States.