The natural rate of unemployment will help determine
A) the open economy effect.
B) the position of the long-run aggregate supply curve.
C) the level of economic growth in the economy.
D) the slope of the long-run aggregate supply curve.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the level of unemployment that exists when the economy is operating at full employment, meaning all available resources are being used efficiently. This level of unemployment determines the position of the long-run aggregate supply curve, which represents the economy's potential output given its available resources. The position of the long-run aggregate supply curve is not affected by the open economy effect or the level of economic growth, but rather by the availability of resources, including labor. Therefore, B is the correct answer.

The Natural Rate of Unemployment Will Help Determine