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chapter%206 - MACROECONOMICS MACROECONOMICS N.GregoryMankiw...

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MACROECONOMICS MACROECONOMICS N. Gregory Mankiw N. Gregory Mankiw C H A P T C H A P T E R E R Unemployment Unemployment 6 6
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2 CHAPTER 6 Unemployment Natural rate of unemployment Natural rate of unemployment : The average rate of unemployment around which the economy fluctuates. In a recession, the actual unemployment rate rises above the natural rate. In a boom, the actual unemployment rate falls below the natural rate.
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Actual and natural rates of unemployment in  the U.S., 1960-2009 Percent of labor force Unemployment rate Natural rate of unemployment
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4 CHAPTER 6 Unemployment Why is there unemployment? If job finding were instantaneous , then all spells of unemployment would be brief, and the natural rate would be near zero. There are two reasons: 1. job search 2. wage rigidity
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5 CHAPTER 6 Unemployment frictional unemployment : caused by the time it takes workers to search for a job occurs even when wages are flexible and there are enough jobs to go around occurs because workers have different abilities, preferences jobs have different skill requirements geographic mobility of workers not instantaneous flow of information about vacancies and job candidates is imperfect
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This note was uploaded on 11/10/2011 for the course ECON 4610 taught by Professor Xiaohuang during the Fall '11 term at Kennesaw.

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chapter%206 - MACROECONOMICS MACROECONOMICS N.GregoryMankiw...

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