Natural unemployment, or the natural rate of unemployment, is the minimum unemployment rate resulting from real
#7 Natural Rate of Unemployment (Student Post)
Natural unemployment, or the natural rate of unemployment, is the minimum unemployment rate resulting from real, or voluntary, economic forces. It can also be defined as the minimum level of calculable unemployment in the Walrasian system of general equilibrium, after accounting for labor and commodity movements, market imperfections, stochastic variability and other supply and demand considerations built into the model. Any unemployment not considered to be natural is often referred to as cyclical, institutional or policy-based unemployment. Variables exogenous to the labor market cause an increase in the natural rate of unemployment; for example, a steep recession might increase the natural unemployment rate if workers begin to lose skills or the motivation to find full-time work again. Economists sometimes call this “hysteresis.”
Reference: Natural Unemployment https://www.investopedia.com/terms/n/naturalunemployment.asp#ixzz5F9s5PiC8
Natural Unemployment – Investopedia
#8 Fiscal Policy and AD (Student Post)
Fiscal Policy changes can affect aggregate demand in several ways. The government can directly effect the aggregate-demand curve by changing the amount of goods and services that it purchases. If the government increases the amount of goods it orders it increases the aggregate demand for goods and services. The government can also effect aggregate demand through changes in taxes, by cutting taxes they hope to stimulate consumer spending, increases the aggregate demand for goods and services. These changes in fiscal policy are further affected by the multiplier and crowding out effects. The multiplier effect is when fiscal policy puts more money into the hands of consumers who then spend that money and further increase aggregate demand and the cycle continues on. The crowding out effect is when the fiscal policy changes cause the interest rate to increase which reduces investment spending and offsets the increase in the aggregate demand.
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Natural-rate-of-Unemployment (NRU) can be interpreted and defined in various ways. Economists usually refer to NRU as the long run average rate of unemployment, ‘frictional plus structural unemployment’ and ‘catallactic unemployment.’ A 100% full-employment is not attainable in the market in the long-run………………………………………….
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