Which situation is likely to increase the natural rate of unemployment?

Question

Quizplus · Accepted Answer

The entrance of many new people into the labour force is likely to increase the natural rate of unemployment because it means there are more people competing for the same number of jobs, leading to a higher unemployment rate.

Answer: B  
 A decrease in unemployment compensation benefits is likely to increase the natural rate of unemployment because it reduces the incentives for unemployed people to keep searching for a job and may cause them to drop out of the labour force.

Answer: D 
 The elimination of minimum wage is likely to increase the natural rate of unemployment because it would give employers the option to pay lower wages, reducing the income of workers and making them less willing to work or search for a job, thereby increasing the unemployment rate.

Thus, the correct choices are A, B, and D.

Which Situation Is Likely to Increase the Natural Rate of Unemployment