Refer to the following table 7.2 when answering the following questions.

-Consider the data in Table 7.2. Using the "bathtub model" of unemployment, in 2010 the natural rate of unemployment was ________ percent.

Question

Refer to the following table 7.2 when answering the following questions.

-Consider the data in Table 7.2. Using the "bathtub model" of unemployment, in 2010 the natural rate of unemployment was ________ percent.

Quizplus · Accepted Answer

The natural rate of unemployment is also known as the nonaccelerating inflation rate of unemployment (NAIRU). It is the rate of unemployment at which inflation is constant or stable. In the bathtub model, it is represented by the bottom of the bathtub. Looking at the data in Table 7.2, the civilian labor force is 155.395 million and the number of unemployed is 8.391 million in 2010. Therefore, the unemployment rate is (8.391/155.395)*100=5.4%. This is close to the estimated NAIRU for the U.S. economy, which is typically between 4% and 6%.

Refer to the Following Table 7