Final answer:
The three main types of unemployment are cyclical, frictional, and structural. Frictional unemployment occurs during job transitions, structural unemployment is caused by economic changes, and cyclical unemployment is related to economic downturns. The natural unemployment rate combines frictional and structural unemployment and represents the lowest sustainable unemployment level without inflation.
Step-by-step explanation:
There are three main types of unemployment: cyclical, frictional, and structural unemployment.
Frictional unemployment occurs when workers are between jobs; for example, a financial analyst quits a job in one city to find work in another city. Structural unemployment is due to changes in the structure of the economy that make certain skills obsolete; for example, factory workers laid off because their jobs have moved overseas. Lastly, cyclical unemployment is linked to the economic cycle, where workers are laid off due to a recession, like landscapers during a housing construction downturn.
The natural unemployment rate consists of frictional and structural unemployment. It reflects the number of people unemployed due to the normal turnover in the labor market and structural changes in the economy. The natural rate of unemployment is the lowest level of unemployment that an economy can sustain over the long run without pushing inflation higher.