Unemployment Flashcards
1
Q
What is the natural rate of unemployment?
A
The average rate of unemployment around which the economy fluctuates
2
Q
In a recession, the actual unemployment rate:
A
Rises above the natural rate
3
Q
In a boom, the actual unemployment rate falls:
A
Below the natural rate
4
Q
The labour market is in a steady state/long run equilibrium, if:
A
The unemployment rate is constant
5
Q
A policy will reduce the natural rate of unemployment only if it lowers:
A
Rate of job separations
6
Q
A policy will reduce the natural rate of unemployment only if it increases:
A
Rate of job finding
7
Q
Why is job finding not instantaneous?
A
- Job search
- Wage rigidity?
8
Q
What is frictional unemployment?
A
Unemployment caused by the time it takes workers to search for a job
