EC102-9SPRING09B - Natural Rate of Unemployment 91 o The...

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  9-1    Natural Rate of Unemployment o The unemployment rate that exists when the economy is at full employment o It is sometimes called the long run level of unemployment o Frictional and structural unemployment (described below) may still exist when unemployment equals its natural rate o Output equals potential GDP at this level of unemployment Types of Unemployment o Frictional Unemployment Unemployment that results from the normal working of the labour market Probably the least severe type of unemployment Also called search unemplyment o Structural Unemployment Unemplyment that prevails because there is restructuring in the economy It is sometimes called technological unemployment because one of the reasons it exists is because workers are replaced by technology Structural employment may also exist is there is a decline in demand in particular industries o Examples of structural unemployment: o http://www.thestar.com/article/576549     o http://www.wheels.ca/printArticle/496923     o http://www.thestar.com/printArticle/436673     o Options for structurally unemployed people o Causes
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  9-2    Seasonal Unemployment Unemployment that exists at different times of the year o Cyclical Unemployment Recall definition of business cycles: Short term fluctuations in real GDP away from trend growth Trend growth is repeated movement in a time series variable Potential GDP growth follows a trend o http://www.thestar.com/article/571440     o http://www.thestar.com/printArticle/568542    
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  9-3    How is Unemployment Measured?
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EC102-9SPRING09B - Natural Rate of Unemployment 91 o The...

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