Question

Suppose the world price of cotton rises substantially. The demand for labor among cotton-producing Texas will firms in Texas will _____ . The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will _____. The temporary unemployment resulting from such sectoral shifts in the economy is best described as _____ unemployment.
Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this all that goal? Check all that apply.

A. offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks

B. Improving a widely used job-search website so that it matches workers to job vacancies more effectively

C. Extending the number of weeks for which unemployed workers are eligible for unemployment insurance benefits from the government

Answer 1

Answer:

The correct answer is "option B".

Improving a widely used job-search website so that it matches workers to job vacancies more effectively

Explanation:

The demand for labor among cotton-producing Texas will firms in Texas will increase. This will happen because of the increase in world price leads to increment in wages.

The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will decrease. This is because cotton is an input. The increase in price of cotton increases the cost which reduces the profits which leads to less hiring of workers.

The temporary unemployment resulting from such sectoral shifts in the economy is best described as frictional unemployment.

Government measures to reduce frictional unemployment is:

Improving a widely used job-search website so that it matches workers to job vacancies more effectively

The option C is not correct, because, another measure that the government uses is to withdraw benefits to short-term unemployed. There would be a greater incentive for workers to find work quickly.