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UNEMPLOYMENT AND INFLATION

Natural rate of employment normal rate of

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Natural rate of employment: Normal rate of unemployment, consisting of frictional & structural unemployment. rat i popul at i on Em pl oy m en t 100 popul at i on age - W ork i n g Em pl oy m en t - = ×
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Ex: unemployment caused by layoffs at Bank Of America = -structural: some had to leave financial sector to find new jobs -frictional= some found jobs at competing banks after brief period of search -cyclical = they were expected to find other jobs after the economic recovery strengthened. Explaining unemployment: GVT Policies and Unemployment Rate In USA, unemployed are eligible for unemployment insurance payments from GVT to help them maintained their income and spending & help reduce severity of recession (opportunity cost of continuing searching for a job = salary u are giving up at the job u could have taken) in Canada and countries of Western Europe opportunity cost of searching for jobs is lower unemployed search longer for jobs higer unemployment rates. Minimum wage law (lowest wage firms could pay workers is 7.25/hour) MW above market wage determined by demand and supply of labor labor supplied greater than qty demanded.
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