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The increased benefits may make people not as motivated to get a new job because they are receiving extra bonuses.

the rate of unemployment is usually higher because the unemployment bonuses are higher and the pensions are higher.

I believe that there is a possibility that America’s NRU will return to its historic level (4-6%) because even if the economy is completely changing the percentage may still eventually end up to be the same or lower because people will get their jobs back after they have changed their profession from what is not necessary to the jobs that are offered.

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Structural UE might indicate that the country is shifting from Tertiary sector to the Secondary sector. This means that the country is experiencing economic development and growth.

2. Part of the Obama stimulus package includes increased benefits for unemployed Americans. How may this pose an obstacle to reducing unemployment in America?

I might increase AD to some extent, as it will give them more disposal outcome and undergo the effect of the multiplier effect. But it will also give them an incentive to save as they will not have to look for a job to stay alive. If the welfare wage is larger than the lowest wage they can get at a job, then why work? This might even increase the UE rate.

3. Historically, the natural rate of unemployment in most European economies has been higher than that of the United States. Why is this?

Because it has many welfare states, like Scandinavia and France. It is still functioning, though, and by keeping the UE slightly higher it means that labor will be less scarce, making the workers accept lower wages.

4. Do you think America’s NRU will return to its historic level (4-6%) when the economy eventually recovers from the current crisis? Why or why not?

Possibly, maybe even lower than that, because in the process Obama has established many new jobs to keep the economy flowing. However it will most likely be balanced out by the likely collapse of the car manufacturers in Detroit.

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2) Increasing the unemployment benefits will not be very effective because then unemployed American will choose to stay home and not work. It gives them less motivation and incetive to work.

3) Natural rate of unemployment is higher in Europe then America because the European government tends to provide more unemployment benefits then American government does. Therefore, they have less incetive to work.

4) Unless American government stop providing unemployment benefits, it is less likely for NRU to return to its historic level.

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2. By increasing the benefits for unemployed Americans, there will be more and more unemployed people in America that would like to stay unemployed and chooses to stay unemployed, since they are able to make a living with the benefits of unemployment that they get from the government. These unemployed people will have less incentive to work since they know that they will be able to live even if they do not work. This might be an obstacle to reduce the rate of unemployment in the US.

3. This is because the unemployment benefits in Europe are much higher than they give in the US. This made unemployed people in the Europe decided to stay unemployed. Also the pension and other aid for people who are not working is higher in the Europe, this is the reason why the rate of natural unemployment in the Europe is higher than the natural rate of unemployment in the US.

4. I don’t think that the NRU in America will return to 4-6% when the economy recovers. This is because now people are working towards better technology and environmentally friendly technology that will be used in the future. Therefore structural unemployment will be higher in the future, since these people doesn’t have the appropriate skills to work on this field. Some of these people will take courses to understand and learn the skills that they need, but not all of unemployed people are able to afford higher education. Therefore I think the NRU in America will not be able to return to 4-6% like it used to be.

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2. This is because Obama's policy will create an opportunity cost for working. With high unemployment benefits, people can choose to stay at home and be idle rather than to find a new job that will require time and money to train. It does not give an incentive for people to work.

3. This is because most European governments give high unemployments benefits due to high taxes payed by the working class. They are well taken care off without working thus they choose not to work and live off the welfare cheques.

4. No. This is mainly dependent on Obama's policy on unemployment benefits. If there are high unemployment benefits being given out, people will still choose to stay and not work as there will be no incentive for them to do so.

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2) With the increased stimulus package being given to the unemployed Americans, more people will be satisfied with staying at home. This results in more voluntary unemployment in the economy. Because of this, people will stay at home instead of looking for a job which causes the unemployment level to stay the same.

3) In Europe, there are benefits for being unemployed, their market was described as 'sclerotonic.' The benefits for being unemployed in the long term were more appealing than that of getting a job and recieving wages. Europe and America were different in another aspect; the Europeans were unable to move with job availability in different regions,whereas in America, the workers moved along with the job to get paid.

4) I believe that America's NRU will slowly return to its historic level of between 4-6%. The speed of this recorvery depends on how well Obama's stimulus package works. The economy just needs to stabalize itself and then it will return to the normal rate of unemployment.

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2. Increasing unemployment benefits may be an obstacle in the target for getting people back to work because on a personal level if that person is comfortable living off the benefits then he has no incentive to get back to work where he may be worse off with taxes, low wages etc.

3. Europe tends to have a higher NRU because most of the European nations are more liberal than the American Government and give higher unemployment benefits, which, as said above, creates less incentives to go out and work.

4. I think whether or not America's NRU will drop back to it's historical level is entirely dependent of whether the Government drops the levels of unemployment benefits to give more incentives to go out and work.

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Increased benefits for unemployed americans may pose an obstacle to reducing unemployment because it decreases the incentive of people to look for jobs and they might not take low paying jobs as a result even though this is whats needed to get out of a recession.

The reason for natural rate of unemployment being higher in European economies is because often times european governments give much higher benefits lowering the incentives of people tp return to work and thus stay in the frictional unemployment phase for longer.

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I'd say that your grammer is better than your logic. The economic crises is the result of 3 things:

1-Policies that required banks to write mortgages to people who could never repay the money

2-The Domino effect of being depend on America..if America gets hit, the whole european system will get in chaos, it's wrong that one country can appoint over the whole system and that will be a big problem for the next future.. depend on america is normal, but not as much as europe is now…

3-Greed of corporate CEO's and Politicians

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2) If unemployed people are treated too nicely by the government, they are disincentivized to work. So if the goal is to decrease unemployment, maybe the government should make being unemployed difficult and nasty so that people will be urged to start working.

3) I suppose because Europe has had more public services for unemployed people; they were able to survive without working.

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It could cause a problem because it doesn’t give incentives to go back to work and find a job if you already get money from the government and are at the same time, able to stay home. A government has to make sure the minimum wages are enough to live for a short period of time, but still give the incentive to find a job and get more revenues.

In most European countries, people have a tendency to stay put for a long period of time. They are less likely to move around to find jobs, sometimes due to the language barrier, but rather wish to stay in one place and wait for a job to open up in the area. In Europe, workers are usually more protected from getting fired right away while Americans, as Theresa previously stated, run on Hire and Fire. Another point is that minimum wages in Europe are much higher than in the United States. A French unemployed worker for instance will receive income from the government for about 2 years while an American worker will receive it for about 3 months. This doesn’t always give an incentive to go back to work right away.

It all depends on how the economy recovers and how quickly. If the economy recovers, the NRU will most likely go back to 4-6%, but it depends on President Obama’s stimulus package and how effective it is on the recovery.

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People could argue that obama's stimulus package to include unemployment benefits is either good or bad. Most people would immediately say it is bad because there is no incentive for the people to go out to find jobs, but the problem at the moment is their aren't Jobs, so how will people be able consume and reboost the economy without an income. In the long run this is bad because their is a loss of incentive but in the short run and during the recession we are in it is good.

It is good because occurding to keynesian in order to boost the economy the Government must start spending huge amounts of money (777 billion dollars) and thus the injection of 777 billion dollars should result in the multiplier effect and result in a total of nearly 1.6 trillion dollars GDP increase of national spending, and in theory fix the whole crisis. In order for this to happen the money must reach the people. If a certain amount of it is put into unemployment benefits this is what will happen. As people get money, and become more confident in the future and hopefully belive a job will be avaliable in 3-6 months time then they wont just save the money they get but rather spend it, and this in turn will boost the economy and hopefully get us out of the recession.

But this should only be a short term increase in benefits, because their will be less of an incentive in the long run should the benefits stay as high as proposed.

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Well, structural unemployment means that a certain type of worker is no longer needed, such as weavers for example. This does not necessarily mean the economy is sick, rather it is healthy because it has developed new means of replacing a weaver for example by machines. This is a sign that the economy is developing, advancing and growing.

2. Part of the Obama stimulus package includes increased benefits for unemployed Americans. How may this pose an obstacle to reducing unemployment in America?

Obama's increasing benefits for unemployed Americans is good in the way that the unemployed people dont have to live in total misery. However, this may encourage these Americans to remain unemployed for as long as possible insted of finding a minimum wage job for example. It is an obstacle in the way that it kills some of the incentive for those people to find a job

3. Historically, the natural rate of unemployment in most European economies has been higher than that of the United States. Why is this?

The unemployment benefits in Europe are better than those in the US and thus it kills most of the incentive to find a job.

4. Do you think America’s NRU will return to its historic level (4-6%) when the economy eventually recovers from the current crisis? Why or why not?

I think that in the long run the NRU may return to its historical level, yet I do not believe it will return to it after the current crisis. I think this is so because at the moment cyclical unemployment is increasing, this suggests that America is advancing technologically, meaning that cyclical unemployment may remain high for a while before returning to normal.

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