Imagine that there are 100MM people in the labor force. Currently 3.4MM of those people are in-between jobs. Another 1.5MM (of those 100MM) have been unemployed for more than half-a-year (and we consider them to be structurally unemployed). Finally, 2.5MM people (of those 100MM) are unemployed due to the fact that the economy is operating below its potential. If this is the only information that you had, and you were asked to estimate the natural rate of unemployment (or the unemployment rate that is consistent with what the Fed would consider to be "full employment,"), what would that rate be

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To estimate the natural rate of unemployment based on the given information we need to calculate the ... View the full answer