(Old Version) Macro 2.3- Unemployment and Natural Rate of Unemployment- AP Macro

Mr. Clifford from ACDC Econ explains the three types of unemployment: frictional, structural, and cyclical. Frictional unemployment occurs when individuals are between jobs, such as recent graduates. Structural unemployment happens when skills become obsolete, like VCR repairmen. Cyclical unemployment is due to economic downturns. The natural rate of unemployment includes frictional and structural types, typically around 5%, which is considered full employment. If unemployment exceeds this, it indicates cyclical unemployment and economic issues.

Which type of unemployment is experienced by individuals who are between jobs or have recently graduated?

• Cyclical unemployment

• Frictional unemployment

• Structural unemployment

• Seasonal unemployment

What causes structural unemployment?

• Seasonal changes in employment

• Temporary layoffs

• A mismatch between skills and job requirements

• Economic recessions

What is the natural rate of unemployment considered to be?

• 3%

• 10%

• 5%

• 0%

Why is it acceptable to have some level of frictional and structural unemployment?

• They indicate a failing economy

• They are signs of economic growth and adaptation

• They show a lack of job opportunities

• They are temporary and seasonal

What does a higher than natural rate of unemployment indicate?

• A stable economy

• Cyclical unemployment

• Increased job opportunities

• An economic boom