2007年5月6日星期日

Unit 3.3, Chapter 11, the Last Word

1. Weigh the two arguments regarding unemployment in Europe. Is unemployment high because of high because of high natural rates of unemployment or because of deficient aggregated demand?

The reason for Europe's high unemployment rate probably lies between the two arguments. It is probably true that the natural rate of unemployment of Europe, especially Western Europe, is among the highest in the world. This is because of their very generous social benefits and minimum wage, which gives employers very little incentive to employ, and people little incentive to look for jobs. Therefore, 7-11% unemployment could possibly already be full employment for Europe. The second argument could also hold partly true, high interest rates and other government monetary policies could have kept aggregate demand relatively low. These two factors combined gave Europe high unemployment rates.

1 条评论:

Jason Welker 说...

Carlos, where's your answer to #2 from the last word section?