(1) Suppose the world price of steel falls substantially. The demand for labor among steel-producing firms in Pennsylvania will . The demand for labor among automobile-producing firms in Michigan, for which steel is an input, will . The temporary unemployment resulting from such sectoral shifts in the economy is best described as unemployment.
(2) Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.

a. Improving a widely used job-search website so that it matches workers to job vacancies more effectively.
b. Increasing the benefits offered to unemployed workers through the government's unemployment insurance program.
c. Establishing government-run employment agencies to connect unemployed workers to job vacancies.

1) reduce

2) increase

3) a, b

Explanation:

1. This would reduce the demand for steel workers because the steel serves as the company's output. Since low price of output means low profit, which leads to low demand for labor.

2. Increase in the demand for automobile workers would be observed because the cost of materials are now cheaper; Implying more profit for companies and thus more demand for labor.

3. Giving unemployment insurance benefits is one best method to reduce this type of unemployment. Also facilitating a widely used job-search website could help.

Suppose the world price of steel falls substantially.

The demand for labor among steel-producing firms in Pennsylvania will DECREASE. The demand for labor among automobile-producing firms in Michigan, for which steel is an input, will INCREASE. The temporary unemployment resulting from such sectoral shifts in the economy is best described as FRICTIONAL UNEMPLOYMENT.

2. A. Improving a widely used job-search website so that it matches workers to job vacancies more effectively.

Explanation:

To tackle frictional unemployment and reduce it, matching of job seekers with job openings of should be carried out.

This can be thoroughly achieved through the transmission of information.

It should be noted tgat frictional unemployment is not related to economic policy and inflation.

What can only erase it is widespread transmission of information among job seekers regarding the availability of jobs.

With such, job seekers in Pennsylvania will get notified of job vacancies in steel-related jobs in Michigan.

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