Any policy aimed at lowering the natural rate of unemployment must either ______ the rate of job separation or ______ the rate of job finding.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is determined by the rate of job separation (the rate at which workers lose their jobs) and the rate of job finding (the rate at which workers find new jobs). Therefore, any policy aimed at lowering the natural rate of unemployment must either reduce the rate of job separation (by, for example, implementing policies to reduce layoffs or increase job security) or increase the rate of job finding (by, for example, implementing policies to stimulate economic growth or provide job training programs). Choice C is the correct answer because it suggests reducing the rate of job separation and increasing the rate of job finding simultaneously, which would lead to a lower natural rate of unemployment.

Any Policy Aimed at Lowering the Natural Rate of Unemployment