ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The natural rate of unemployment is a combination of frictional and structural unemployment that persists in an efficient, expanding economy when labor and resource markets are in equilibrium.

Detailed explanation-2: -The natural rate of unemployment is the lowest level that a healthy economy can sustain without creating inflation. Natural unemployment contains three components: structural unemployment, surplus unemployment, and frictional unemployment.

Detailed explanation-3: -The natural rate of unemployment is de-fined simply as the rate of unemployment that is compatible with a steady inflation rate. The natural rate can therefore be thought of as the rate of unemployment that would occur in the absence of cyclical fluctuations.

Detailed explanation-4: -Natural unemployment consists of two of the three main types of unemployment: frictional and structural. It explains why there will always be some level of unemployment, even in a healthy economy. People will always be changing jobs, and sometimes they leave a job before finding a new one.

Detailed explanation-5: -Anything above the Natural Rate indicates presence of the fourth type of unemployment: Cyclical. 4. Cyclical unemployment – job loss due to economic fluctuations. In a boom, cyclical unemployment may be zero, but in a recession the number of cyclically unemployed will grow.