1. Given the three primary types of unemployment we discussed in Lecture #17, it makes sense to think of the natural rate of unemployment as the sum of _____ and _____ unemployment.
A. cyclical; natural rate of
B. cyclical; frictional
C. frictional; structural
D seasonal; structural
2. Which of the following statements most accurately reflects the Bureau of Labor Statistics’ (BLS) calculation of its standard, U-3, the unemployment rate?
A. The labor force includes all adults who are physically and mentally able to work.
B. People working part time are counted as “employed” by the BLS in its official (or U-3) unemployment rate.
C. Unpaid homemakers are counted as “employed” by the Bureau of Labor Statistics.
D. None of above is correct.
Natural rate of unemployment is the sum of frictional and structural unemployment.
Frictional unemployment: This refers to the unemployment that occurs in an economy due to the movement of people from one job to another. It is unemployment for the duration till which people get another job after leaving from the previous one.
Structural unemployment: This refers to the unemployment that occurs in an economy due to technological changes. This means that whenever the skills of employed people doesnt match the skill requirements of the employers then this leads to layoff resulting in structural unemployment.
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