ECON 1BB3 Chapter 9: Chapter 9 – Unemployment and Its Natural Rate.docx
3 Mar 2012
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ECON 1BB3 Full Course Notes
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Chapter 9 unemployment and its natural rate. Natural rate of unemployment refers to the amount of unemployment that the economy normally experiences. This type of unemployment does not go away on its own, even in the long run. Cyclical unemployment refers to the year-to-year fluctuations in employment around its natural rate and it is closely associates with the short-run up and downs of economic activity. Four explanations for the economy"s natural rate of unemployment: job search, minimum- wage laws, unions and efficiency wages. Measuring unemployment is the job of stats canada monthly labor force survey, of 50,000 households. Puts each adult (15 and up) in each surveyed household on one of three categories: Employed worked within the last week at a paid job. Unemployed temporary layoff or is looking for a job. Not in the labor force person who fits neither above category, i. e. full time student, homemaker or retiree.
