Question

T/F/U. If wages were flexible downwards, would we have more or less unemployment? Draw and explain a graph(s)consistent with your answer

Answer 1

Answer 1. Option D is the correct option. To find cyclical inemployment we must have the knowledge of the natural rate of employment. It is because cyclical unemployment means the change in the natural rate of employment due to trends in the economy. It may be structural, frictional change etc.

Answer 2. Option D is correct. Unemployment has many reasons apart from the wages reveived. Economies in general do not suffer unemployment due to inflexible or flexible wages. Some major reasons could be slow exonomic growth, caste system in the developing countries etc.

Answer 3. Option E is correct. All of the anove representvthe adversity of wage cuts. In adversity of wage cutsbthe workers atr considered to have better knowledge about their productivity and thus know better if they are being paid well or not. On the ither hand sometimes the employer too have the knowledge about the productivity of the woekers and employee the best fit methods.

Answer 4. The answer is A ie., Frictional Unemployment. It is because frictional employment occurs when people shift from one job to another while structural inemployment takes place when people lose jobs due to exonomic trends like technological changes, industrial revolution, recession etc.9