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Question: a suppose between 2017 and 2018 the total number of...

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(a)   Suppose between 2017 and 2018 the total number of people employed and the unemployment rate both fell. Briefly explain how this is possible. [2 marks]

(b)   In addition to the payment of unemployment benefits, discuss why extra costs are borne by the federal government during times of rising unemployment. [2 marks]

(c)   A politician makes the following argument: ‘The economy would operate more efficiently if frictional unemployment were eliminated. Therefore, a goal of government policy should be to reduce the frictional rate of unemployment to the lowest possible level.’ Briefly explain whether you agree with this argument. 

[2 marks]

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