At the natural rate of unemployment,

Question

Quizplus · Accepted Answer

At the natural rate of unemployment, there will still be some level of unemployment due to structural and frictional factors, even though the economy is producing at its maximum level of output. Option A is incorrect because there will always be some level of unemployment due to these factors. Option C is incorrect because there will still be structurally unemployed individuals, such as when an industry becomes obsolete. Option D is incorrect because the natural rate of unemployment does not mean the economy is producing at its maximum level of output, only that it is producing at its potential output level.

At the Natural Rate of Unemployment