Country X came out of a prolonged recessional period a few years ago, thanks to a vigorous fiscal stimulus by the government. The country’s economy had resumed growing two years ago, reaching a solid pace of growth of more than 2.5 percent last year. Yet, unemployment levels, which increased fast during the recession, are still  stuck at a high level (around 10 percent), and do not show any signs of falling. Which of the following factors do you think contributed to this, and why?

a. Wages are sticky which represents an obstacle for employment in growing firms.

b. Employment and unemployment are always lagging indicators in response to changes in economic growth.

c. People are out of a job for too long and, in turn, have difficulties in returning to work.

d. The recession has led to the replacement of old sectors with new ones, boosting structural unemployment at a time when cyclical unemployment is decreasing.

e. The recession has led firms to be much more cautious with their hiring strategies–preferring to rely on overwork to cope with increasing demand.

f. The fiscal stimulus has crowded out private investment spending that has been the main source of reductions in unemployment. Choose two of these statements and write a short essay. Use data to support your claims.