Question

The natural level of employment (N) will increase when which of the following occurs?

A. increase in u
B. reduction in unemployment benefits
C. increase in markup of prices over costs
D. all of the above

Answer 1

The natural level of employment (N) will increase when there is a reduction in unemployment benefits. Correct option is B.

Step-by-step explanation:

The natural level of employment (N) will increase when there is a reduction in unemployment benefits. When the benefits are decreased, it provides less incentive for individuals to remain unemployed and encourages them to actively seek employment, which ultimately leads to an increase in the natural level of employment. Although options A and C can have an impact on employment, they are not necessarily directly related to the natural level of employment.