In equilibrium,an decrease in matching efficiency
A) increases the unemployment rate and vacancies are constant.
B) increases the unemployment rate and vacancies increase.
C) decreases the unemployment rate and vacancies are constant.
D) decreases the unemployment rate and vacancies increase.
E) increases the unemployment rate and vacancies decrease.

Question

Quizplus · Accepted Answer

In equilibrium, a decrease in matching efficiency means that it becomes more difficult for unemployed workers to find jobs and for employers to find workers. This will lead to an increase in the unemployment rate. As vacancies are determined by the demand for labor, a decrease in matching efficiency will not affect the number of vacancies.

In Equilibrium,an Decrease in Matching Efficiency