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Macroeconomics: Frictional Unemployment

1164 Words5 Pages

Macroeconomics is the part of economics that explores the behavior and decision making of the economy as a whole, to where microeconomics focuses more on the behavior of the individuals and firms in order to understand the decision making process of the individuals and the firms. Macroeconomics deals with aggregate measures of the economy such as, national income and unemployment rates. Unemployment is one of the largest concerns in economics and can lead to many problems such as, a decline in the economy, poverty, depression, and in many cases will result in crime.
Unemployment is when an individual who is of a working age is unable to get a job but would like to be fully employed. According to the website bls.gov, “People are classified as …show more content…

According to the textbook Economics - The Macro Economy Today, “Many workers have sound financial or personal reasons for leaving one job in order to look for a different job.” During that time, when a person moves between jobs he or she may experience a time period without work. This time period is considered frictional unemployment. Another example of frictional unemployment occurs when a student finishes school and becomes part of the labor force. It might take several attempts to find the job that fits their needs. This brief time period is considered frictional unemployment. The final type of unemployment is cyclical …show more content…

The rate of unemployment is equal to the number of unemployed people divided by the labor force. On the website bls.gov it is reported that, “Annual data on the labor force, employment, and unemployment in States and substate areas are available from two major sources—the Current Population Survey (CPS) and the Local Area Unemployment Statistics (LAUS) program.” As of February 2016, the current unemployment rate as shown by bls.gov is 4.9%. When you take into consideration that the natural rate of unemployment is between 4.7% - 5.8% and that our current unemployment rate is at 4.9%, we can determine that the current unemployment rate is at the low end of the natural rate of

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