Why might it be inefficient for the labor market not to have some form of unemployment compensation?
What will be an ideal response?
Some form of unemployment compensation lowers the opportunity cost of looking for work. Without any compensation whatsoever workers might be tempted to terminate their job search much more quickly and accept jobs that are well below their productivity because of the urgent need to earn money just to get by to pay for food and other necessities.
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Assume the demand function for good X can be written as Qd = 80 - 3Px - 2Py + 10I where Px = the price of X, Py = the price of good Y, and I = Consumer income. This equation implies that X and Y are complements
Indicate whether the statement is true or false
Ideal randomized controlled experiments in economics are
A) often performed in practice. B) often used by the Federal Reserve to study the effects of monetary policy. C) useful because they give a definition of a causal effect. D) sometimes used by universities to determine who graduates in four years rather than five.