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Which of the following statements best explains the natural rate of unemployment?
- a)Sum of Frictional unemployment and Structural unemployment
- b)Sum of Frictional unemployment and Cyclical unemployment
- c)Sum of Structural unemployment and Cyclical unemployment
- d)Sum of Structural unemployment and Seasonal unemployment
Correct answer is option 'A'. Can you explain this answer?
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Which of the following statements best explains the natural rate of u...
Explanation:
The natural rate of unemployment, also known as the non-accelerating inflation rate of unemployment (NAIRU), is the rate of unemployment that exists when the labor market is in equilibrium, and there is no cyclical unemployment. It is the level of unemployment that is consistent with stable prices and does not result in accelerating inflation.
Factors that contribute to the natural rate of unemployment include:
1. Frictional unemployment: This is the unemployment that occurs when individuals are in the process of switching jobs or entering the labor force for the first time.
2. Structural unemployment: This is the unemployment that occurs when there is a mismatch between the skills and qualifications of workers and the requirements of available jobs.
3. Seasonal unemployment: This is the unemployment that occurs due to changes in the demand for labor during certain seasons of the year.
4. Cyclical unemployment: This is the unemployment that occurs as a result of fluctuations in the business cycle.
Answer:
The statement that best explains the natural rate of unemployment is (a) the sum of frictional unemployment and structural unemployment.
The natural rate of unemployment can be calculated by adding the frictional and structural unemployment rates together. This is because these two types of unemployment are considered to be "natural" and are not caused by changes in the business cycle.
Cyclical unemployment and seasonal unemployment are not included in the calculation of the natural rate of unemployment because they are caused by fluctuations in the business cycle and are not considered to be "natural" or inherent in the labor market.
Therefore, the natural rate of unemployment represents the level of unemployment that exists when the labor market is functioning efficiently, and there is no cyclical unemployment. It is an important concept in macroeconomics as it provides a benchmark for policymakers to aim for when setting employment targets.
The natural rate of unemployment, also known as the non-accelerating inflation rate of unemployment (NAIRU), is the rate of unemployment that exists when the labor market is in equilibrium, and there is no cyclical unemployment. It is the level of unemployment that is consistent with stable prices and does not result in accelerating inflation.
Factors that contribute to the natural rate of unemployment include:
1. Frictional unemployment: This is the unemployment that occurs when individuals are in the process of switching jobs or entering the labor force for the first time.
2. Structural unemployment: This is the unemployment that occurs when there is a mismatch between the skills and qualifications of workers and the requirements of available jobs.
3. Seasonal unemployment: This is the unemployment that occurs due to changes in the demand for labor during certain seasons of the year.
4. Cyclical unemployment: This is the unemployment that occurs as a result of fluctuations in the business cycle.
Answer:
The statement that best explains the natural rate of unemployment is (a) the sum of frictional unemployment and structural unemployment.
The natural rate of unemployment can be calculated by adding the frictional and structural unemployment rates together. This is because these two types of unemployment are considered to be "natural" and are not caused by changes in the business cycle.
Cyclical unemployment and seasonal unemployment are not included in the calculation of the natural rate of unemployment because they are caused by fluctuations in the business cycle and are not considered to be "natural" or inherent in the labor market.
Therefore, the natural rate of unemployment represents the level of unemployment that exists when the labor market is functioning efficiently, and there is no cyclical unemployment. It is an important concept in macroeconomics as it provides a benchmark for policymakers to aim for when setting employment targets.
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Which of the following statements best explains the natural rate of u...
Sum of Frictional unemployment and Structural unemployment. The natural rate of unemployment is the level of unemployment that is consistent with a stable, healthy economy. It is also known as the equilibrium unemployment rate or the long-run unemployment rate. The natural rate of unemployment is determined by the structural and frictional factors in the economy and is independent of the business cycle.
Frictional unemployment is unemployment that arises from the normal process of workers and employers searching for the best match between their skills and job opportunities. It includes unemployment that results from people transitioning between jobs, such as recent graduates looking for their first job or workers who are changing careers.
Structural unemployment is unemployment that arises from a mismatch between the skills and characteristics of the workers and the needs and demands of the job market. It can be caused by technological change, globalisation, or other structural changes in the economy. Therefore, the natural rate of unemployment is the sum of frictional unemployment and structural unemployment. It does not include cyclical unemployment, which is unemployment that arises from the ups and downs of the business cycle, or seasonal unemployment, which is unemployment that arises from the seasonal nature of certain industries.
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Which of the following statements best explains the natural rate of unemployment? a)Sum of Frictional unemployment and Structural unemploymentb)Sum of Frictional unemployment and Cyclical unemploymentc)Sum of Structural unemployment and Cyclical unemploymentd)Sum of Structural unemployment and Seasonal unemploymentCorrect answer is option 'A'. Can you explain this answer?
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Which of the following statements best explains the natural rate of unemployment? a)Sum of Frictional unemployment and Structural unemploymentb)Sum of Frictional unemployment and Cyclical unemploymentc)Sum of Structural unemployment and Cyclical unemploymentd)Sum of Structural unemployment and Seasonal unemploymentCorrect answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following statements best explains the natural rate of unemployment? a)Sum of Frictional unemployment and Structural unemploymentb)Sum of Frictional unemployment and Cyclical unemploymentc)Sum of Structural unemployment and Cyclical unemploymentd)Sum of Structural unemployment and Seasonal unemploymentCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements best explains the natural rate of unemployment? a)Sum of Frictional unemployment and Structural unemploymentb)Sum of Frictional unemployment and Cyclical unemploymentc)Sum of Structural unemployment and Cyclical unemploymentd)Sum of Structural unemployment and Seasonal unemploymentCorrect answer is option 'A'. Can you explain this answer?.
Which of the following statements best explains the natural rate of unemployment? a)Sum of Frictional unemployment and Structural unemploymentb)Sum of Frictional unemployment and Cyclical unemploymentc)Sum of Structural unemployment and Cyclical unemploymentd)Sum of Structural unemployment and Seasonal unemploymentCorrect answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following statements best explains the natural rate of unemployment? a)Sum of Frictional unemployment and Structural unemploymentb)Sum of Frictional unemployment and Cyclical unemploymentc)Sum of Structural unemployment and Cyclical unemploymentd)Sum of Structural unemployment and Seasonal unemploymentCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements best explains the natural rate of unemployment? a)Sum of Frictional unemployment and Structural unemploymentb)Sum of Frictional unemployment and Cyclical unemploymentc)Sum of Structural unemployment and Cyclical unemploymentd)Sum of Structural unemployment and Seasonal unemploymentCorrect answer is option 'A'. Can you explain this answer?.
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