NATURAL EMPLOYMENT Flashcards
1
Q
What is natural rate of unemployment
A
Even at full employment, there will always exist some frictional and structural unemployment. This rate of unemployment is known as the ‘natural rate’.
2
Q
How to calculate natural rate of unmeployment
A
The addition of strucutural employment and frictional employment
3
Q
What is the natural rate of unemployment currently estimated to be
A
4%
4
Q
How would a boom period be reflected in the three types of unemployment
A
The frictional compontent would likely have incresed, because workers would be encouraged to re-enter the labour force as the eocnomy improved. Strucutural unemployment always represents the mismatch between worker skils and modern market requirement
