2. Explain the Beveridge Curve and how it has changed during the Great Recession (and subsequent...

2. Explain the Beveridge Curve and how it has changed during the Great Recession (and subsequent recovery).

Expert Solution

Beveridge Curve shows the relationship between the job opening rate and the unemployment rate. Higher job opening rates reduce unemployment and vice-versa.

Unemployment is drawn on the horizontal axis and job openings rate on the vertical axis. The relationship is shown by the downward slope Beveridge Curve.

A rightward shift in the Beveridge Curve is due to higher job opening rate and higher unemployment rate and vice-versa

During the Great Recession, the curve becomes flat to the right corner. It was stretch out to the right corner indicating significantly higher unemployment rate will less job opening rates.

But after the Great Recession gets over and the economy starts recovering, the rightward shift in the curve is seen. This shift indicated that there was a higher job opening rate in the market for a particular unemployment rate.

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Rahul Sunny answered 2 years ago

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