Unemployment Overview

Overview of unemployment.

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  • Unemployment (Un)
    • Low Un is a macro objective
    • Full employment (FE)
      • # who want to work = # employers want to hire
      • Still some Un (equilibrium) even at FE
    • Equilibrium
      • Natural level of Un
        • Frictional, seasonal and structural
    • Disequilibrium
      • Classical/Real wage
    • Reduce by
      • Find cause then appropriate policy
    • significant costs for the unemployed + econ
  • When  labor market doesn't clear
    • Disequilibrium
      • Classical/Real wage
  • Demand deficient
    • Real wage rate too high
      • Wage cuts
    • Lack of AD
      • Demand deficient
        • Inject AD through fiscal, monetary

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