• The following is the labor market situation in Country XXX.
• “There is an increase in the numbers of entrants into the labor market in Country XXX around October as the new graduates who have just finished their studies are looking for jobs. Stiff competition added by the absence of an agency which can help these graduates find suitable jobs make it difficult for them to grab a job. At the same time, the government also announced that it has reduced the unemployment benefits.
• Based on the above labor market situation, explain how the characteristics of this market affect the natural rate of unemployment in Country XXX.