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a) The natural unemployment rate in the United States has varied over the last 50 years. According to the

Congressional Budget Office, the natural rate was 5.5% in 1960, rose to about 6.5% in the 1970s, and had declined to about 4.8% by 2000. What do you think might have caused this variation?

b) The Humphrey-Hawkins Act of 1978 required that the federal government maintain an unemployment rate of 4% and hold the inflation rate to less than 3%. What does the inflation-unemployment relationship tell you about achieving such goals?

c) Many people think that the process of putting computer technology to work and incorporating computers into the workplace is causing a massive restructuring of virtually every institution of modern life. If they are right, what are the implications for unemployment? What kind of unemployment would be affected?

Top Answer

a) The NRU is the rate that exists at the full employment equilibrium level. It is the rate that will exist in the long run.... View the full answer

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