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Unformatted text preview: sustainable level of unemployment b. U.S. full employment = 95% 3. Natural rate of unemployment (Not fixed) a. Amount of unemployment reflected by a.i. Job shopping a.ii. Imperfect information b. A sustainable rate c. At this rate the economy is fully employed d. U.S. Natural rate of unemployment is 10% 4. Actual versus potential GDP a. Potential GDP (Output) a.i. Max sustainable output level consistent with full employment of resources a.i.1. Size of labor force a.i.2. Quality of labor (productivity) a.i.3. Natural rate of unemployment 5. Inflation a. Sustained increase in general level of prices b. Decline in the value of money 6. Adverse affects of inflation a. High and variable inflation reduces investment b. Inflation distorts the information delivered by prices...
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- Fall '07