effects of gdp and nru Flashcards
natural rate of unempyment fromual
frictionaL +STRUCUTRAL
NATURAL RATE OF UNEMPLYMENT
the minimum unemployment rate resulting from real or voluntary economic forces.
Why is the unemployment rate never zero?
Because there is always frictional unemployment ) and structural unemployment (changes in technologies and skills mismatches). These types of unemployment always keep the unemployment rate above zero.
Can cyclical unemployment ever be zero? Why or why not?
Yes, cyclical unemployment can be zero during economic booms because labor demand is high. However, during recessions, cyclical unemployment increases, contributing significantly to the overall unemployment rate.
What is the estimated natural rate of unemployment in Australia, and what does it consist of?
The natural rate of unemployment in Australia is estimated to be around 4%, consisting of approximately 2% frictional unemployment and 2% structural unemployment.
What were the approximate unemployment rates during the 2020 recession in Australia?
During the 2020 recession, the total unemployment rate was approximately 7.5%, with about 1% frictional unemployment, 2.5% structural unemployment, and 4% cyclical unemployment.
What is the “natural rate of unemployment”?
minimum unemployment rate resulting from real or voluntary economic forces. It represents the sum of frictional and structural unemployment in a healthy economy at full employment.
What are the positive effects of frictional and structural unemployment?
Positive effects include improved pay and conditions, better job opportunities, incentives for individuals to acquire new skills and knowledge, and increased overall economic efficiency and productivity.
What are the negative effects of unemployment on the economy?
Negative effects include a lower standard of living due to reduced disposable income, lower spending flows, reduced business revenues, and wastage of human capital, resulting in production inefficiency and a GDP gap.
How did the unemployment rates change during the 2022-23 boom in Australia?
During the 2022-23 boom, the total unemployment rate fell to 3.5%, with frictional unemployment increasing to about 1.5%, structural unemployment at around 2%, and cyclical unemployment dropping to 0% due to stronger labor demand.
What is the GDP gap?
GDP gap is the difference between the actual GDP and the potential GDP of an economy, indicating that resources (like labor) are not being fully utilized.
Why has the natural rate of unemployment increased since the 1960s?
increased due to changes in the labor market, such as more frequent job changes, technological advancements, and the emergence of new skills, which were less prevalent in the 1960s.
