Compute the natural rate of unemployment

Reference no: EM1373829

Question: Suppose if the economy currently has a frictional unemployment rate of 2%, structural unemployment of 2%, seasonal unemployment of 0.5%, and cyclical unemployment of 2%, determine the natural rate of unemployment?

Where is the economy operating relative to its potential GDP?

What happens to the natural rate of unemployment and potential GDP if cyclical unemployment rises to 3% with other types of unemployment unchanged from part (a)?

What happens to the natural rate of unemployment and potential GDP if structural unemployment falls to 1.5% with other types of unemployment unchanged from part (a)?

Reference no: EM1373829

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