Occurs when the only unemployment is frictional, structural, or seasonal
Does not mean zero unemployment
Frictional, seasonal, and structural unemployment can still occur
Occurs when from 4% to 6% of the labor force is unemployed
UNEMPLOYMENT Measurement of Unemployment, 2002 Total Population 288,600,000 Labor force 142,500,000 74,700,000 71,400,000 8,300,000 134,200,000 Employed Not in labor force Under 16 and/or institutionalized Unemployed
Inflation. Creeping or normal inflation. 1-3 percent a year. Why must we have some inflation for a healthy economy? Galloping inflation. 100-300 percent per year. Hyperinflation or 500 percent a year.