Question

Suppose the world price of steel falls substantially. The demand for labor among steel-producing firms in Pennsylvania will_____ . The demand for labor among automobile-producing firms in Michigan, for which steel 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 goal? Check all that apply.
Improving a widely used job-search website so that it matches workers to job vacancies more effectively
Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks
Taxing the price of placing a resume or posting a job opening on a job-search website

Answer 1

Answer:

This will cause the demand for labor to decline.

The demand for labor will thus increase.

This is a type of frictional unemployment.

Explanation:

If the world price of steel falls. The quantity supplied of steel will also decline. The firms will thus need a fewer quantity of labor. This will cause the demand for labor to decline.

A reduction in the price of steel means that the input cost of automobile-producing firms will decline. This will cause the firms to produce more. They will need more labor to produce more. The demand for labor will thus increase.

This is a type of frictional unemployment. Frictional unemployment is the type of unemployment that is caused because of shifts between jobs.

The government can improve a widely used job-search website so that it matches workers to job vacancies more effectively. It can also a cash bonus if they find a new job within a specified number of weeks.