ECON in Our World

a.How does the natural rate of unemployment change over time? Does it decrease or increase? Is it constant? What factors would impact its evolution?

b.Compare the recorded unemployment rate to the natural rate of unemployment. Is one consistently higher or lower than the other?

c.Consider the periods of economic recession, signified by the grey areas in the graph. How does the recorded unemployment rate change relative to the natural rate of unemployment? Why is that so?

d.Consider the periods of economic expansion, the areas between the grey columns in the graph. How does the recorded unemployment rate change relative to the natural rate of unemployment? Why is that so?