The Natural Rate of Unemployment

Explain what is meant by the natural rate of unemployment and assess the extent this concept has played in the implementation of macroeconomic policies over recent decades.

The natural rate of unemployment, or non-accelerating inflation rate of unemployment (NAIRU) as it is also called is a concept that states there is a level of unemployment to which unemployment will tend towards in the long run, and where unemployment is greater than this level inflation will begin to accelerate. And this concept can be explained through the use of The Phillips Curve.

The Phillips Curve
The Phillips Curve is an empirical theory developed by Professor AW Philips in the 1950s that shows an inverse relationship between changes in money wage rates and the level of unemployment.
The exact formula he found was – Percentage Change in Wages=-0.900+9.638U-1.394. And as wage rates can be assumed to be closely linked with prices, this has been taken by many......

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Title: Natural Rate Of Unemployment
Approximate Word Count: 1747
Approximate Pages: 7 (250 words per double-spaced page)

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