An unemployment rate of zero cannot be expected since?

Question

1.aggregate demand can never create enough job vacancies.

2.there will always be discouraged workers.

3.some portion of the labor force will always be between jobs.

4.there are some people who do not want to work.

Answer 1

Let's see.

1. It is possible to have a shortage of workers when a population is small i.e. Germany after WWII, so nope.

2. Discouraged workers are not counted in the unemployment rate since they are not looking for a job and given up, so nope.

3. This is true. It is called frictional unemployment because the people are usually looking for better jobs.

4. That true but these people are not counted in the unemployment rate since they don't want work.

So #3

Answer 2

2 and 3

Answer 3

3

Answer 4

As others have pointed out, #1, #2, and #4 are not the main factors.

I would add that #2 doesn't make sense because workers only become "discouraged workers" if they can't find a job. If there were no unemployment in the first place, there would be no discouraged workers.

Multiple people have said that the answer is #3 (frictional unemployment), but that's not the main factor, either. If you believe in the dogma of free-market theory, frictional unemployment can't exist. Supply and demand for labor (as for anything else) are supposed to magically balance out at the optimal point instantly.

Even if we ignore free-market dogma, "frictional unemployment" is still an unsatisfying explanation. If you want a new job, you can look for it while you continue working at your current job. Very few people choose to be "between jobs". And if it takes you 6 months to find a new job, that's unemployment. Calling it "frictional" doesn't mean it's not unemployment.

The truth is that the term "frictional unemployment" is a convenient way for economists, politicians, and businesspeople to make high unemployment sound as though it's not a flaw in the economic system.

ONE of the major factors in unemployment (although not the only one) is that the Federal Reserve Board deliberately keeps the unemployment rate high to hold down wages. (The Fed refers to this as "holding down inflation", but the only component of inflation that the Fed worries about much is wages of typical workers. The Fed worries only a little about resource prices, and not at all about the inflation caused by skyrocketing pay of upper management.)

Once again, the Fed had to come up with a term (like "frictional unemployment") that would be politically acceptable, so the Fed uses the term "Non-Inflationary Unemployment Rate". In the mid 1990s, Alan Greenspan said this was 6%. In other words, it was deliberate government policy to keep the unemployment rate at 6% to hold down wages. Similar statements from other Fed leaders date back at least as far as 1980. ("A lot of observers, including my staff, think that the non-inflationary full employment rate is somewhat higher than 5.1 percent and may be closer to 6 percent.") Although the Fed is supposed to watch both unemployment and inflation ("The Federal Reserve operates under the Federal Reserve Act, which requires the Fed to try to achieve maximum employment along with price stability." http://www.federalreserve.gov/boarddocs/speeches/2000/20000113.htm), the Fed's top priority is fighting inflation. In fact, the current chairman of the Fed (Bernanke) explicitly said the U.S. should make it a higher priority to fight inflation than to fight unemployment. (Ibid)

It's not clear what would happen if the fed actually tried to reduce unemployment. I'm not naive enough to think it would go to zero. But it is unlikely to go to zero as long as the Fed's top priority is to keep unemployment at 4-6% to hold down wages.

Answer 5

The correct answer is 3, but it is not the complete answer to the question.

3. describes what is called frictional unemployment, which is one of the two forms of unemployment that are factored into the "natural rate of unemployment." Frictional unemployment is pretty much what #3 says: it's the unemployment that results from people quitting their jobs or getting fired, and are currently in between jobs, but only temporarily.

The other form is called structural unemployment. Contrary to what other answerers have said, structural unemployment deals with companies and industries closing down, resulting in layoffs of the workers who were employed by the closing companies. The unemployed from structural unemployment are also assumed to be only temporarily unemployed, which is why those who are structurally unemployed are factored into the natural unemployment rate.

Answer 6

2 and 4 are incorrect because discouraged and unwilling workers are not trying to find jobs - and they are thus not counted as 'unemployed.'

1 is incorrect because there are indeed many jobs with regional and national shortages of workers (e.g. nursing).

3 is my choice because companies will always be closing, new workers entgering from college, and until a person seeking a job is placed that person is counted as 'unemployed.'

Answer 7

Are you looking for only 1 answer... They're all legitimate answers but 3&4 is what I've been taught specifically, with more emphasis on 3(I would choose 3 in a multiple choice).

Answer 8

I was very surprised several years ago when I read that in the old USSR they had no un-employment, so I researched it a little further.

It seems kids were encouraged to get good grades in school and as they got older advanced to higher levels of learning. The smartest & brightest became doctors, scientists, engineers, etc.

The other kids advanced as far as they could, and were trained to do work not quite as complex as the above 3 job titles.

The lower percentage of kids were trained to do the jobs that required the least amount of mental stimulation.....end result everybody had a life long job.......As far as cross training, it wasn't covered in the article.

Apparently, healthy people that absolutely refused to work, were convicted of that 'Crime' & sent to work prisons.

Communism offers no free choices!

Answer 9

if a countrys goverment keep giveing people more money than thay need while unemployed then why not be a layabout,u might not be able to go on exotic holidays,wine and dine every night,and send your kids to private schools,save the tokens from national news papers to go on holidays,go to a supermarket and buy as much wine,beer,and spirits as u can carry for a fraction of the price of going out and the goverment takes care of the schooling.who are the ones that pay,the poor unemployed,or the hard working tax payers.

Answer 10

As unemployment tends to zero, inflation should tend to infinity.