Question

Sectoral shifts, frictional unemployment, and job searches Suppose the world price of cotton rises substantially. The demand for labor among cotton-producing firms in Texas will ________. The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will_________ . The temporary unemployment resulting from such sectoral shifts in the economy is best described as ____________ unemployment. Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal?

a. Establishing government-run employment agencies to connect unemployed workers to job vacancies
b. Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks
c. Increasing the benefits offered to unemployed workers through the government's unemployment insurance program

Answer 1

increase

decrease

frictional unemployment

a, b

Step-by-step explanation:

Frictional unemployment . the period of time a person is unemployed from the period he leaves his current job and the time he gets another job. Eg. when a real estate agent who leaves a job in Texas and searches for a similar, higher-paying job in California.

As a result of the increase in price of cotton, the profit of making cotton would increase. So the production of cotton would increase and more labour would be needed

the cost of production for cotton producing firms would increase and this would discourage production. The demand for labour would increase

the government can reduce frictional unemployment by having policies that reduce the job search period and would incentivise labour to get employed quickly