The natural rate of unemployment hypothesis was advocated by
Answers
Natural rate of unemployment is name that was given to a key concept in the study of economic activity.
Milton Friedman and Edmund Phelps handling this 'human' problem in 1960 both received the Nobel Prize in economics for their work and development of the concept is cited as a main motivation behind the prize.
Easy Summary of the concept is: 'natural rate of unemployment when an economy is steady state of full employment" is the uniform of workforce who are unemployed'.
Other way this concept clears the economic term "full employment" does not mean "zero unemployment".
It shows the hypothetical unemployment rate persistent with total production being at the "long-run" level.
This level is persistent with total production in absence of different temporary frictions such as incomplete price adjustment in labor and goods markets.
Natural rate of unemployment therefore joins the unemployment rate constant under a classical view of determination of activity.
Mainly confirmed by economy's supply side and so output possibilities and economic institutions.
The natural rate of ‘unemployment hypothesis’ was advocated by Milton Friedman.
Explanation:
- The ‘natural rate of unemployment hypothesis’ is a theory concerning the labour market and its systems.
- According to the theory, there would always be some sort of unemployment in the labour markets.
- This ‘rate of unemployment’ is due to a ‘combination of frictional’, surplus and structural unemployment since the workers are always on the move and looking for better opportunities. This a situation that can also take place in a natural economy.
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