Question

When the macroeconomy is experiencing a higher than natural rate of unemployment, it must be because

Answer 1

Answer:

wages cannot adjust downward quickly and easily.

Explanation:

In a situation where the macroeconomy is experiencing a higher than the natural rate of unemployment, it must be because "wages cannot adjust downward quickly and easily."

Given that wages are arguably the most significant aspect to entice employees or people to work and get paid. Hence, where the wages are not enough to cause for the employees, there tends to be a situation where wages cannot adjust downward quickly and easily. And therefore, people would not want to work where there is low pay, and eventually, unemployment increases.