Describe the measure of actual unemployment

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Question: (A) How is full employment defined, and why does the full-employment rate of unemployment keep changing?

(B) In December 1998, the BLS reported the following unemployment rates:

1. Unemployed over 15 weeks             1.1%

2. Job losers                                    2.0%

3. ‘‘Official'' unemployment rate           4.3%

4. Plus discouraged workers               4.5%

5. Plus marginal workers                    5.2%

6. Plus part-time workers                  7.5%

Which do you think is the best measure of actual unemployment? Explain your choice.

(C) In 1990, most economists thought the full-employment rate of unemployment was about 6%, but in 2000 they thought it was about 4%. Were they wrong in 1990, or was this change based on economic factors? If so, what factors caused them to change their opinion?

Reference no: EM131737240

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