Answer to Question #50384 in Macroeconomics for abdulla sabit

Question #50384
What is unemployment? Do you think in a full employment situation there may remain 2-3% unemployment in economy?Why or Why not?
Expert's answer
Unemployment occurs when people are without work and actively seeking work. Theunemployment rate is a measure of the prevalence of unemployment and it is
calculated as a percentage by dividing the number of unemployed individuals by
all individuals currently in the labor force. During periods
of recession, an economy usually experiences a relatively high
unemployment rate. According to International Labour
Organizatiin report, more than 197 million people globally or 6% of the
world's workforce were without a job in 2012.
There remains considerable theoretical debate regarding the causes,consequences and solutions for unemployment. Classical economics, New classical
economics, and the Austrian School of economics argue that market
mechanisms are reliable means of resolving unemployment. These
theories argue against interventions imposed on the labor market from the
outside, such as unionization, bureaucratic work rules, minimum wage laws,
taxes, and other regulations that they claim discourage the hiring of workers.
In a full employment situation there may remain 2-3% unemployment in economy,
because there is a natural level of unemployment, which consists of structural
and frictional unemployment.

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