Economics Aggregate Demand And Supply Questions
The concept of the natural rate of unemployment refers to the level of unemployment that exists when the economy is operating at its potential output or full employment level. It represents the level of unemployment that is consistent with the normal functioning of the labor market, where there is a balance between the number of job seekers and the number of job vacancies. It is also known as the non-accelerating inflation rate of unemployment (NAIRU), as it is the level of unemployment that does not put upward pressure on wages and inflation.