Unit 6 (lecture 1)

Question 1

categories of unemployment

Answer 1

• Cyclical
• Frictional
• Structural
• Voluntary

Question 2

Cyclical

Answer 2

• relates to the cyclical trends in growth and production that
  occur within the business cycle

Question 3

Frictional

Answer 3

• unemployment due to people being in the process of moving
  from one job to another

Question 4

Structural

Answer 4

• associated with Economic shifts, and technology change.

Question 5

Voluntary

Answer 5

• associated with a lack or diminished incentives to work

Question 6

NRU

Answer 6

• Natural rate unemployment
• Unemployment that exists when the economy’s actual and potential output are equal

Question 7

NAIRU

Answer 7

• Non-Accelerating Inflation Rate of Unemployment (NAIRU)
• the unemployment rate consistent with maintaining stable
  inflation
• NAIRU and NRU are often viewed as
  two names for the same thing.

Question 8

inflation and NRU

Answer 8

• NRU > unemployment rate, inflation will tend to fall
• NRU < unemployment rate inflation tends to rise

Question 9

NAIRU provides

Answer 9

-important benchmark for:
- gauging the state of the business cycle
- the outlook for future inflation
- the appropriate stance of
monetary policy

Question 10

NRU and unemployment categories

Answer 10

• NRU consists of frictional, structural, and, voluntary unemployment

Question 11

Augmented phillips curve equation

Answer 11

∆W = yp + π e - α (u-un)

yp= growth in productivity
π e = expected inflation
u= unemployment rate
un = natural rate of unemployment
α = impact adjuster

Question 12

Long run inflation and unemployment

Answer 12

• long-run: actual and expected inflation are the same, which means
  that u= un ( no trade off between inflation & unemployment)
• shown in vertical phillips curve