UNEMPLOYMENT

PREVIOUS YEAR QUESTION SOLVED
2018 JULY II
Non Accelerating Inflation Rate of Unemployment (NAIRU) means:
A) A rate of unemployment for which the change in the rate of inflation is zero.
B) A rate of inflation which makes the rate of unemployment zero.
C) A rate of inflation for which the change in the rate of unemployment is zero.
D) A rate of unemployment which is equal to the rate of inflation.
ANS: (A)The non-accelerating inflation rate of unemployment (NAIRU) — also referred to as the long-run Phillips curve — is the specific level of unemployment that is evident in an economy that does not cause inflation to rise up. NAIRU often represents equilibrium between the state of the economy and the labor market. NAIRU can be stated as natural rate of unemployment which is the rate of unemployment that prevails when the output and employment are at the full employment level. The natural rate of unemployment includes frictional and structural types of unemployment.