Question

Suppose the world price of steel falls substantially. the demand for labor among steel-producing firms in pennsylvania willincrease . the demand for labor among automobile-producing firms in michigan, for which steel is an input, willincrease . the temporary unemployment resulting from such sectoral shifts in the economy is best described ascyclical unemployment.

Answer 1

If the world price of steel has fallen substantially, the likely outcome of this matter are the following;
- the labor demand in regards of the steel producing firms in Pennsylvania will likely decrease
- In regards with the labor among the auto-mobile producing firms in Michigan, as the steel they use is for input, it is likely that it will increase
- Whereas the temporary unemployment that results from sectoral shifts in the economy is described to be a frictional unemployment.