Under which circumstance is the natural rate of unemployment expected to decrease?

Labour Market MCQs for PPSC, FPSC, NTS, and Pakistan government job tests. Select an option below, then read the explanation.

PPSCFPSCNTSPakistan govt jobs
Subject
Labour Marketeconomics-mcqs › labour-market
Published
1 Jun 2019
Last updated
28 May 2026

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Explanation

An increase in unemployment benefits can reduce the natural rate of unemployment by providing better support for job seekers, potentially encouraging more active job search and reducing frictional unemployment. In contrast, higher income taxes, more training, or increased geographical immobility typically have different or opposite effects.

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