The natural rate of unemployment in high-income countries is caused by the economy being in a recession. Natural rate of unemployment is the lowest rate of unemployment that can exist when inflation is stable or not rising. Many economists still differ, however, over the precise degree of unemployment that should be regarded as the natural rate of unemployment.
The inferred relationship between high economic activity and inflation or between deflation and unemployment is now much less widely accepted among economists. Many people believe that a rate of unemployment between 4% and 5% indicates full employment and is not very alarming.
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