Answer to Question #50384 in Macroeconomics for abdulla sabit
What is unemployment? Do you think in a full employment situation there may remain 2-3% unemployment in economy?Why or Why not?
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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