A politician makes the following argument: "The economy would operate more efficiently if frictional unemployment were eliminated. Therefore, a goal of government policy should be to reduce the frictional rate of unemployment to the lowest possible level." Eliminating all frictional unemployment

a. will be good for the economy since the presence of frictional unemployment increases job destruction.

b. will not be good for the economy since the presence of frictional unemployment decreases job creation.

c. will not be good for the economy since the presence of frictional unemployment increases economic efficiency.

d. will be good for the economy because the total unemployment will fall.

Question

Business

Master

25 May, 05:22

A politician makes the following argument: "The economy would operate more efficiently if frictional unemployment were eliminated. Therefore, a goal of government policy should be to reduce the frictional rate of unemployment to the lowest possible level." Eliminating all frictional unemployment

a. will be good for the economy since the presence of frictional unemployment increases job destruction.

b. will not be good for the economy since the presence of frictional unemployment decreases job creation.

c. will not be good for the economy since the presence of frictional unemployment increases economic efficiency.

d. will be good for the economy because the total unemployment will fall.

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Answers (1)

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Johan Hawkins · Answer 1

Answer: The correct answer is "c. will not be good for the economy since the presence of frictional unemployment increases economic efficiency.".

Explanation: Eliminating all frictional unemployment will not be good for the economy since the presence of frictional unemployment increases economic efficiency.

Frictional unemployment is voluntary unemployment that lasts the time between one worker leaving one job and finding another. That is, the unemployed person decided to leave his job voluntarily, either to rest, study or to find another job. It is beneficial for the economy, since it results in a better allocation of resources. However, if the search takes too long and the mismatches are too frequent, the economy suffers, since some work is not carried out.