MEA-1.E—a. Define the types of unemployment and the natural rate of unemployment. b. Explain changes in the types of unemployment

a. Define the types of unemployment and the natural rate of unemployment. b. Explain changes in the types of unemployment.

• Economists primarily focus on three types of unemployment: cyclical, frictional, and structural.
• The natural rate of unemployment is the unemployment rate that would exist when the economy produces full-employment real output. It is equal to the sum of frictional and structural unemployment.
• The deviation of the actual unemployment rate from the natural rate is cyclical unemployment.
• The natural rate of unemployment can gradually change over time because of such things as changes in labor force characteristics.
• Enduring understanding MEA-1: An economy’s performance can be measured by different indicators such as gross domestic product (GDP), the inflation rate, and the unemployment rate.