Define natural rate of unemployment

  1. Define natural rate of unemployment (also known as full employment unemployment or NAIRU-Non Accelerating inflation rate of unemployment).
  2. What is the difference between unemployment rate and natural rate of unemployment (NAIRU)?
  3. What is the current natural rate of unemployment? How did it change in the past 30 years? What kinds of factors affect the natural rate of unemployment?
  4. Considering that the current unemployment rate is 4.7% , what kind of policies should the government and the Fed implement? (You can use Keynesian or the Classical-Supply side approach)

 

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