Macro2B Essay Example | Topics and Well Written Essays - 1000 words - 1

Macro2B - Essay Example Workers who spend time looking for employment are engaged in job search. This type of unemployment is the case of frictional employment, which is due to the time workers spend in job search. This exists even when the number of people seeking jobs is equal to the number of jobs being offered, that is it does not mean that there is a surplus of labor. However, unemployment when there are more people seeking jobs in a labor market than there are jobs available at the current wage is called as structural unemployment. Both frictional and structural unemployment is inevitable in any economy. Thus, a certain amount of unemployment is normal, which is called as the natural rate of unemployment. The natural rate of unemployment is the unemployment rate that arises from the effects of frictional plus structural unemployment. Actual unemployment rate fluctuates around the natural rate of unemployment. The natural rate of unemployment is calculated as: 4. Perhaps tongue-in-cheek, some economists occasionally distinguish between â€Å"good† inflation and â€Å"bad† inflation. Speculate as to why these economists might see some inflations as superior to others. Inflation is the sign that an economy is growing or expanding. The lack of inflation is an indicator that the economy is weakening. A small inflation is just as bad as high inflation. Thus, it is not easy to label inflation as good or bad, and it depend on overall economy and individual personal thinking. When an economy grows or expands (boom) the price level of goods and services rises. This effectively increases the inflation. Since, economy is growing people have more money to purchase and therefore, the purchasing power of individual increases comparatively. This type of inflation is generally referred as â€Å"good† inflation. If an economy continue to grows, there comes to a point (peak), when the inflation is too high and government needs to do something to lower