Question

In-Class Question 6.1 Which of the following factors will most likely lead to a fall in the unemployment rate? (5 points) The use of more robots in production Falling number of working-age immigrants Stronger labour unions An increase in minimum wage Expectation of an economic slowdown enswers on D2

Answer 1

The use of more robots: Use of more robots in industrial production leads to the displacement of workers from the manufacturing sector and thus leads to an increase in the unemployment rate.

The falling number of working-age immigrants reduces competition in the labor market and thus reduces the unemployment rate in the economy.

Stronger labor unions in a competitive labor market increase the equilibrium wage rate and thus leads to a decrease in the employment level. This leads to an increase in the unemployment rate.

An increase in the minimum wage leads to a decrease in the equilibrium employment level which leads to an increase in the unemployment rate.

The expectation of an economic slowdown leads to a decrease in the production activity which results in a decrease in labor demand, This reduction in the demand for labor reduces the equilibrium employment level and thus increases the unemployment rate

Ans: Falling number of working-age immigrants