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Author Question: Discuss the likely impact of each of the following on the unemployment rate: a. The length of ... (Read 43 times)

daltonest1984

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Discuss the likely impact of each of the following on the unemployment rate:
 
  a. The length of time workers are eligible to receive unemployment insurance payments is cut in half.
  b. The government passes a law making labor unions illegal.
  c. The minimum wage is raised by 50 percent.
  d. The government funds an Internet site where companies can post job openings at no charge.

Question 2

For purposes of monetary policy, the Federal Reserve has targeted the interest rate known as the
 
  A) prime rate. B) Treasury bill rate. C) federal funds rate. D) discount rate.



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millet

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Answer to Question 1

a. The unemployment rate will likely decrease, since decreasing the time people are eligible to receive unemployment benefits will increase the opportunity cost of searching for a job.
b. The unemployment rate will likely decrease, since companies will no longer have to pay above-market union wages and will be able to afford to hire more workers.
c. The unemployment rate will likely increase since an increase in minimum wage will raise the wage above the market wage for some workers.
d. The unemployment rate will likely decrease, since making information on job openings more available lowers the search involved in frictional unemployment.

Answer to Question 2

C





 

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