Natural Rate of Unemployment - Cyclical unemployment
3 important questions on Natural Rate of Unemployment - Cyclical unemployment
What is the definition of cyclical unemployment?
It is the difference between total unemployment and the natural rate, u – u*.
What occurs during recessionary gaps in terms of unemployment?
Actual unemployment rate exceeds the natural unemployment rate, u > u*.
How is the actual unemployment rate characterized during expansionary gaps?
The actual unemployment rate is lower than the natural rate, u < u*.
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