Question

1. Our current unemployment rate is 3.7% in the United States. Explain as clearly as possible what that 3.7% means (where does that number come from?) Then explain how that compares to our goal for unemployment.

2. Explain the difference between cyclical, frictional, and structural unemployment and how they relate to the natural rate of unemployment.

Answer 1

Ans

1 it means that 3.7% of those people who are in labour force do not have any job. Feds currenent opinion is economy can sustain median value of 4. 5% of economy.so current level of unemployment is quite less

2 frictional unemployment happens because people are rendered unemployed temporarily while switching from one job to another

Structural unemployment occurs when skills of workers do not match with those required by industry

Cyclic unemployment occurs due to fluctuations in economy like depression, recession

Natural rate of unemployment includes structural and frictional unemployment but not cyclic unemployment