2a. If the economy currently has a frictional unemployment rate of 2 percent, structural unemployment of 2 percent, seasonal unemployment of 0.5 percent, and cyclical unemployment of 2 percent, what is the natural rate of unemployment?
Where is the economy operating relative to its potential GDP?
b. What happens to the natural rate of unemployment and potential GDP if cyclical unemployment rises to 3 percent with other types of unemployment unchanged from part (a)?
c. What happens to the natural rate of unemployment and potential GDP if structural unemployment falls to 1.5 percent with other types of unemployment unchanged from part (a)?© BrainMass Inc. brainmass.com October 16, 2018, 5:38 pm ad1c9bdddf
NATURAL RATE OF UNEMPLOYMENT
Proposed by the American economist Milton Friedman (1912-1992), NARU refers to the rate of unemployment, which occurs when all markets are in an equilibrium position. Thus the natural rate of unemployment is the equilibrium rate of unemployment.
Frictional unemployment: This is simply the time it takes a company to match a qualified job applicant with the right position. It also includes people who are between jobs. It is simply the time it takes for a worker, having lost his job, to register at the job agencies, read the adverts in the papers or on the internet, write or update their CV, ...
This discusses the concept of NATURAL RATE OF UNEMPLOYMENT
Four Economic Questions - GDP, GNP, Natural Rate of Unemployment
1. Describe the four broad categories of GDP using consumption approach. Give detailed account of each component.
2. Explain the difference between GDP and GNP. What adjustments needs to be made to GDP to arrive at GNP?
3. What is the "Natural Rate of Unemployment" ?
4. Why do some economies grow faster than others?View Full Posting Details