Which one among the following statements is not correct?

Statement 4 is incorrect because at full employment, the measured unemployment rate is positive, not negative. Full employment corresponds to the 'natural rate of unemployment' (NRU), which consists of frictional and structural unemployment. Even in a healthy economy, these types of unemployment persist due to job transitions and skill mismatches [2]. Statement 1 is correct as unemployment is countercyclical; when growth falls below potential, firms reduce workforces, causing unemployment to rise [3]. Statement 2 is correct because structural unemployment arises from long-term shifts like automation or changes in demand that create mismatches between worker skills and available jobs. Statement 3 is correct as cyclical unemployment is directly tied to business cycle downturns and recessions. Therefore, the assertion that the unemployment rate is negative at full employment is theoretically and empirically false.

Sources

1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 3: Poverty, Inequality and Unemployment > 1. Structural Unemployment > p. 50
2. [2] https://www.rba.gov.au/education/resources/explainers/unemployment-its-measurement-and-types.html
3. [3] https://www.imf.org/external/pubs/ft/fandd/basics/unemploy.htm