natural rate of unemployment

Question 1

what is the natural rate of unemployment (what examples and final)

Answer 1

-unemployment when labour market is in equilbirum
-consists of structural, frictional and seasonal
-can never achieve 0% unemployment (full employment is employment at natural rate)

Question 2

graph showing natural rate of unemployment

Answer 2

-wage and quantity (x)
-supply (willing) and demand curve
-s actual is above starting higher - represents those who actually take
-equilibrium is s actual and demand w1 and Qfe (q1)
-q2: where s meets d, demand is the difference

Question 3

structural unemployment

Answer 3

-lack the appropriate skills
-geographical: don’t like where it is located

Question 4

frictional

Answer 4

-in between jobs (searching)

Question 5

seasonal

Answer 5

-choose to reject job off-season

Question 6

free market determinants of natural unemployment

Answer 6

-generous benefit systems
-excessive labour market regulation (hiring and firing (high)- not willing to take risks and hire low skilled workers, strong tu’s)

Question 7

interventionist determinants of natural unemployment

Answer 7

-lack of transport/ housing infrastructure
-lack of in-work training