Answer:
Explanation:
if truly rate of actual unemployment is lower compared to the natural unemployment, it implies that the economy is making a greater effort for higher output level than its potential output.
Lower unemployment than natural rate of unemployment will reflect as lower availability of workers in the economy ,so unions and workers start demanding more wages ,which leads to increase in production cost of firms . Increase in production cost ,leads to decrease in firms supply and short run aggregate supply curve shifts lefttwards and SRAS keep shift to left till economy reach to full employment or potential GDP.As GDP Decreases no of workers Decreases and employment Decreases.
Conclusion: Short run aggregate supply Decreases and employment Decreases.
It can help us learn and be influenced by other systems of governing and compare from there
Perfect competition: Characterized by many small price-taking firms producing standardized product in an industry in which there are no barriers to enter or exit.
Monopolistic competition: a market structure characterized by a few small firms producing a differential product with easy entry into the market.
Oligopoly: A very diverse market structure characterized by a small number of interdependent large firms, producing a standardized or differential product in a market with a barrier to entry.
Laissez-faire: a policy of letting things take their own course; abstention by governments from interfering in the workings of the free market.
Market structure: the interconnected characteristics of a market, such as the number and relative strength of buyers and sellers and degree of collusion among them, level and forms of competition, extent of product differentiation, and ease of entry into and exit from the market.
Collusion: takes place within an industry when rival companies cooperate for their mutual benefit.