In the book it says that people spend too little time searching for a job, and therefore less productive job matches are being made. Where did they get that from? It would seem that if actual unemployment was lower than natural it would be better-mainly because you would think GDP would be higher. Can someone set me straight?
Can someone explain why it is bad when the actual rate of unemployment is lower than the natural rate?auto financing
No, some things they make up in economics just don%26#039;t make any sense. I can%26#039;t imagine that people spend too little time searching for a job. A fundamental principle of this introductory economics is that people know what is good for them. If we take away that assumption, then we should have some type of socialist system that gives jobs out to people.
I think the people who believe in this natural rate crap want to take is so seriously that because the unemployment rate varies so much in the newspaper they have to come up with stories like this. If you believe the natural rate was 6%, and then you find the reported rate to fall to 4.5 over,a few years, then in order for you not to be wrong, you say %26#039;oh well, the actual rate is just lower than the natural rate, what a terrible thing. And when the unemployment rate just stays there for 10 years or so, then you say %26#039;well I guess there was change in the natural rate, and everything is fine%26#039;.
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