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Unemployment Types & Natural Rate
AP Macroeconomics · Unit 2 Economic Indicators
Learning Objectives
Frictional: Voluntarily between jobs (new grads, job-switchers). Always exists in a healthy economy. Short-term and desirable.
Structural: Skills mismatch — workers' skills don't match available jobs. Caused by technology, globalization, or geographic immobility.
Cyclical: Caused by economic downturns (recessions). Rises when GDP falls below potential. The ONLY type that can be fixed by fiscal/monetary policy.
Natural Rate: NRU = Frictional + Structural. When cyclical = 0, the economy is at full employment (~4-5% in the US).
Tags
UnemploymentFrictionalStructuralCyclicalNRU
Unemployment Components
Frictional = 2.0%
Structural = 2.0%
Cyclical = 0.0%
UNEMPLOYMENT ANALYSIS
Natural Rate (NRU):4.0%
Actual Rate:4.0%
GDP Gap:None
Economy Status:Full Employment
Key AP Insight: "Full employment" does NOT mean 0% unemployment. It means cyclical = 0. Some frictional and structural unemployment is natural and unavoidable. Economists consider NRU ≈ 4-5% as healthy for the US economy.