Question

3. What is the definition of an "unemployed" person according to the U.S. Bureau of Labor Statistics? Find out the U.S. rates of unemployment for 1979-2018 and plot them into a graph. (a) "The unemployment rate has gone down, which means the economy is doing really well." True or false? Explain. (b) What are the three types of unemployment? Explain each one. What is natural rate of unemployment?

Answer 1

ANSWER:

3 Unemployed person are those who are in labour force but didn't have a job.

a) Please tell the source to get the data.

b) True , because if unemployment has gone down this means there is spur in investment, spur in economic activity etc but at the same time there is an increase in inflation rate which is good only at moderate level.

c) Three type of unemployment are

1) Cyclical unemployment- This is due to the slowdown in economy . The slowdown has been due to fall in aggregate demand.

2) Frictional unemployment - This is due to the mismatch between what employees are looking for and what employees want .

3) Structural unemployment - This is due to the change in economic structure if economy. For example a country which was earlier a agricultural economy now become a service and industrial economy.

d) Natural rate of unemployment is a sum of Structural ,Frictional , Cyclical unemployment because a economy us always expanding because workers are always entering the market and looking for job.

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