Unformatted text preview: are to best address the problem. However, seasonal, frictional and structural unemployment cannot be easily combated with the use of fiscal and monetary policy. Indeed, there is a full employment unemployment rate of around 5%. That is, full employment exists when the unemployment rate is equal to the sum of seasonal, frictional, and structural unemployment rates. Unemployment statistics may understate (e.g. discouraged workers) or overstate true unemployment. A recessionary gap is the amount by which GDP falls below that necessary to provide for full employment. An inflationary gap is just the opposite. NEW CONCEPTS INTRODUCED business cycle coincident indicators frictional unemployment GDP gap recession lagging indicators structural unemployment trough recovery unemployment rate cyclical unemployment economic growth civilian labor force full employment leading indicators discouraged worker peak...
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- Spring '08
- Unemployment, unemployment rates, frictional unemployment GDP