Question

Define the natural rate of unemployment. Does the natural rate of unemployment differ among countries? Why?

Define the natural rate of unemployment. Does the natural rate of unemployment differ among countries? Why?

Homework Answers

Answer #2
  • The natural rate of unemployment is the minimum rate of unemployment that occurs when an economy is expanding and when it is producing an output at its full potential.
  • It can be also defined as a sum of frictional and structural unemployment.
  • Natural rate of unemployment may differ among different countries.
  • This is because, different countries have different productivity level, population age, total income, GDP level etc.
  • These factors directly influence the natural rate of unemployment.
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