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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

How would an increase in the world price of oil affect the amount of frictional unemployment? Is this unemployment undesirable? What public policies might affect the amount of unemployment caused by this price change?

To determine

How the increase in world price of oil affects the frictional unemployment.

Explanation

An increase in the world price of oil leads to an increase in the volume of frictional employment. When the oil price increases, the oil producing companies will increase their output and employment. This change adversely affects the other industries and reduces their output and employment. This is because the workers are shifted from different sectors to the oil producing industries, which leads to an increase in the frictional unemployment...

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