This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: be zero. 4. Frictional and structural unemployment are inevitable and in many ways desirable 5. When the economy contracts, the number of people unemployed and the unemployment rate rise. 6. *Employment tends to fall when aggregate output falls and to rise when aggregate output rises. 7. A decline in the demand for labor does not necessarily mean that unemployment will rise. 8. A decline in the demand for labor will initially create an excess supply of labor. As a result, the wage rate will fall until the quantity of labor supplied again equals the quantity of labor demanded. 9. Classical economist believe that if the quantity of labor demanded and the quantity of labor supplied are brought into equilibrium by rising and falling wage rates, there should be no persistent unemployment above the frictional and structural amount. 10 18...
View Full Document
This note was uploaded on 04/26/2009 for the course ECO 304K taught by Professor Hickenbottom during the Spring '10 term at University of Texas.
- Spring '10