If there is 2 percent frictional unemployment, 3 percent structural unemployment, and 1 percent cyclical unemployment, then the natural rate of unemployment equals:
A)3 percent.
B)4 percent.
C)5 percent.
D)6 percent.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the part of the total unemployment rate that is attributable to frictional and structural unemployment; in this case it is 2 + 3 = 5 percent.

If There Is 2 Percent Frictional Unemployment, 3 Percent Structural