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Define the natural rate of unemployment

November 30, 2022
Economics homework help
Christopher R. Teeple

 

  1. Define the natural rate of unemployment (also known as full employment unemployment or NAIRU-Non Accelerating inflation rate of unemployment).
  2. What is the difference between the unemployment rate and the natural rate of unemployment (NAIRU)?
  3. What is the current natural rate of unemployment? How did it change in the past 30 years? What kinds of factors affect the natural rate of unemployment?
  4. Considering that the current unemployment rate is 3.7% (October 2022), what kind of policies should the government and the Fed implement? (You can use the Keynesian or the Classical-Supply side approach) How do you compare your recommendation to the current government’s policies?

 

Here are some resources for you but feel free to do your own research and find more information on the internet. Please cite your references.

https://www.cbo.gov/about/products/budget-economic-data#6 (Go to ’10 Year Economic Projections’ at the bottom of the page and click on the most recent date. An excel file will open. Go to ‘Calendar Year Data Release’ and find Line 30 for Natural Rate of Unemployment)

http://www.federalreserve.gov/faqs/economy_14424.htm

https://fred.stlouisfed.org/series/NROU

https://www.frbsf.org/economic-research/publications/economic-letter/1998/september/the-natural-rate-nairu-and-monetary-policy/

https://www.thebalance.com/natural-rate-of-unemployment-definition-and-trends-3305950

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