A Level economics revision – the natural rate of unemployment

The natural rate of unemployment is part of the Cambridge A Level course and is usually found in a multiple choice question or essay. Below is a useful video from Marginal Revolution University. The natural rate of unemployment is a situation where there is no excess or deficiency of demand for labour. Known as the equilibrium rate of unemployment, it is caused primarily by frictions in the labour market. Types of unemployment which are likely to cause this rate to rise would include structural; technological; frictional and seasonal. The video covers types of unemployment which impact the natural rate of unemployment and also explain the difference between the actual rate and the natural rate. There is also a mindmap below.

Adapted from “A Level Economics Revision” by Susan Grant

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