Question

1) Suppose the world price of steel rises substantially. The demand for labour among steel-producing firms in Northern Ontario will (increase/decrease). The demand for labour among automobile-producing firms in Southern Ontario, for which steel is an input, will (increase/decrease). The temporary unemployment resulting from such sectoral shifts in the economy is best described as (frictional, structural, cyclical, seasonal) unemployment.
2) Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.

a) Increasing the benefits offered to unemployed workers through the government's unemployment insurance program.

b) Establishing government-run employment agencies to connect unemployed workers to job vacancies.

c) Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks.

Answer 1

1) Suppose the world price of steel rises substantially. The demand for labour among steel-producing firms in Northern Ontario will increase. The demand for labour among automobile-producing firms in Southern Ontario, for which steel is an input, will decrease. The temporary unemployment resulting from such sectoral shifts in the economy is best described as structural unemployment.

2) Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.

b) Establishing government-run employment agencies to connect unemployed workers to job vacancies.

c) Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks.