TeachMeFinance.com - explain natural rate of unemployment
natural rate of unemployment -- The rate of unemployment arising from all sources except
fluctuations in aggregate demand. Those sources include frictional unemployment, which is associated
with normal turnover of jobs; structural unemployment, which includes unemployment caused by mismatches
between the skills of available workers and the skills necessary to fill vacant positions; and
unemployment caused by such institutional factors as legal minimum wages, the presence of unions,
social conventions, or employer wage-setting practices intended to increase workers' morale and effort.
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