Suppose the actual rate of unemployment is 4 percent. What is the natural rate of unemployment if actual output equals potential output?
A)0 percent
B)−4 percent
C)2 percent
D)4 percent

Question

Quizplus · Accepted Answer

Since actual output equals its potential, unemployment is equal to its natural rate of 4 percent. There is no cyclical unemployment when actual output equals potential output.

Suppose the Actual Rate of Unemployment Is 4 Percent