1215

The natural rate of unemployment is the sum of:

A) structural and cyclical unemployment.

B) frictional and cyclical unemployment.

C) frictional and structural unemployment.

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The sum of the frictional and structural unemployment rates is called the natural rate of unemployment. Unemployment is at its natural rate when the rate of cyclical unemployment is zero.

1215

When real GDP falls below potential GDP:

A) structural unemployment increases.

B) cyclical unemployment increases.

C) cyclical unemployment decreases.

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When real GDP falls below potential GDP, cyclical unemployment increases. When real GDP increases, cyclical unemployment decreases. Structural unemployment arises from a mismatch of employer needs and workers’ skills and is not directly related to cyclical changes in GDP growth.

1215

Full employment is said to occur when:

A) cyclical unemployment equals zero.

B) the natural rate of unemployment equals zero.

C) structural and frictional unemployment approach zero.

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Cyclical unemployment is unemployment caused by a change in the general level of economic productivity. When cyclical unemployment is zero, the economy is said to be operating at full employment.

Note: When the economy is operating at less than full capacity, positive levels of cyclical unemployment will be present. At levels above full capacity, negative cyclical unemployment will exist.

The natural rate of unemployment is that rate of unemployment present when the economy is at its full employment rate of production or output. At full employment, both structural and frictional unemployment still exist. Therefore, there is some level of unemployment, and the natural rate of unemployment is not equal to zero.

The “number unemployed divided by the number in the labor force” is the definition of the rate of unemployment. There is no magical number or parameter that indicates full employment.

1215

Which of the following is zero when an economy is at full employment?

A) Cyclical unemployment.

B) Frictional unemployment.

C) Structural unemployment.

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Full employment is reached when cyclical unemployment is zero.

luqian55

thanks a lot