Answer These Unemployment Terms Flashcards

The steady-state rate of unemployment; the rate of unemployment toward which the economy gravitates in the long run.

The unemployment that results because it takes time for workers to search for the jobs that best suit their skills and tastes.

The unemployment resulting from wage rigidity and job rationing.

Theories of real-wage rigidity and unemployment according to which firms raise labour productivity and profits by keeping real wages above the equilibrium level.

True. The unemployment rate is a countercyclical variable, meaning that it moves in tandem with output.

False. On a monthly basis, there are many people who leave their current jobs or re-joining the labour force.

False. Any policy changes affecting the job separation rate, job finding rate and birth rate will change the natural rate of unemployment.

False. Reservation wage is defined as the wage rate that renders a worker indifferent between working and not working.

The labour demand curve is given by the marginal product of labour schedule faced by firms. If a country experiences a reduction in productivity, then the labour demand curve shifts to the left as in the figure. If labour becomes less productive, then at any given real wage, firms demand less labour.