Question

In the 1990’s Ireland made unemployment benefits less generous. This change would likely have reduced a. both structural unemployment and the natural rate of unemployment. b. frictional unemployment but not the natural rate of unemployment. c. both frictional unemployment and the natural rate of unemployment. d. structural unemployment but not the natural rate of unemployment.

Answer 1

Answer:

The correct answer is option c.

Explanation:

In the 1990’s Ireland made unemployment benefits less generous. This provided an incentive to workers to find a job quicker as the employment benefits were reduced.  

This would further cause the frictional unemployment rate to decline.  

Frictional unemployment is the unemployment caused because of shifting from one job to another.  

The natural rate of unemployment includes both structural unemployment and frictional unemployment. A reduction in frictional unemployment will cause natural unemployment to decrease.