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Canada (161,663)
Economics (279)
ECON 1000 (180)
Chapter 9

Chapter 9

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ECON 1000
Troy Joseph

Macroeconomics Chapter 9 Unemployment and its Natural Rate • Country that saves & invests high fraction of its income enjoys more rapid growth in its capital stock & GDP than a similar country that saves & invests less • Economy’s Natural Rate of Unemployment: amount of unemployment that the economy normally experiences • Cyclical Unemployment: year-2-year fluctuations in unemployment around its natural rate • Natural unemployment does not go away on its own Identifying Unemployment How is Unemployment Measured? • Employed  if he/she spent some of previous week working at a paid job • Unemployed  if he/she is on temporary layoff or is looking for a job • Not in the labour force  ie. Full-time student, homemaker, retiree • Labour Force = # of Employed + # of Unemployed • Unemployment Rate = (# of Unemployed/Labour Force) X 100 • Labour-Force Participation Rate = (Labour Force/Adult Population) X 100 Does the Unemployment Rate Measure What We Want It To? • Discouraged Searchers: people who want to work but have given up on looking for a job Why Are There Always Some People Unemployed? • Natural Rate of Unemployment: rate of unemployment the economy tends to return to in the long run • Employment rate differs from natural rate due to Cyclical Unemployment: departure of unemployment from its natural rate, arises due to SR econo
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