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Chapter 21: Q 23. (page 524)

What forces create the natural rate of unemployment for an economy?

Short Answer

Expert verified

There are various different forces that create the natural rate of unemployment.

Step by step solution

01

Step 1. Definition

In an economy the workers may come and go and always look for a better job, the period of joblessness in which the workers are looking for a job is called the natural level of unemployment.

02

Step 2. Explanation

The natural rate of unemployment is created by frictional and structural unemployment.

03

Step 3. Components

Frictional unemployment is the period when a worker is chosen to leave their job in search of the new one and the workers join the workforce for the first time.

Structural unemployment is a type of involuntary unemployment which is caused due to the mismatch between the workers and skills required and this is also called the skill gap.

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Most popular questions from this chapter

What criteria do the BLS use to count someone as

employed? As unemployed?

What type of unemployment (cyclical, frictional, or structural) applies to each of the following:

(a) landscapers laid off in response to a drop in new housing construction during a recession.

(b) coal miners laid off due to EPA regulations that shut down coal-fired power

(c) a financial analyst who quits his/her job in Chicago and is pursuing similar work in Arizona

(d) printers were laid off due to a drop in demand for printed catalogs and flyers as firms go the internet to promote and advertise their products.

(e) factory workers in the U.S. were laid off as the plants shut down and move to Mexico and Ireland.

What is frictional unemployment? Give examples of frictional unemployment.

What is the difference between being unemployed

and being out of the labor force?

Is it desirable to pursue a goal of zero unemployment? Why or why not?
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