a) How would you classify unemployment caused by an increase in unemployment insurance (Structural, Frictional, or cyclical)?

b) Would an increase in the number of unemployment insurance suggest that it was becoming easier or more difficult for people to find jobs? Explain.

Expert Solution

Ans (A) This is Frictional unemployment because workers are preferring unemployment insurance benefits over working. Whereas it is not structural unemployment, because it is not mentioned that there is a miss match between skills demanded and supplied by workers. Also, it is not cyclical which originates due to business cycles.

Ans (B) As people take unemployment insurance benefits, the number of workers who are actively searching for a job decreases, and it becomes then easy to get a job.

Rahul Sunny answered 2 years ago

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