Which of the following statements about the natural rate of unemployment is correct?
A)In the 1960s, economists thought the natural rate was 4%.
B)Today, most economists believe the natural rate is zero.
C)When unemployment is at its natural rate, then only frictional unemployment remains.
D)When unemployment is at its natural rate, then only structural unemployment remains.

Question

Quizplus · Accepted Answer

In the 1960s, the prevailing view among economists was that the natural rate of unemployment was around 4%. This view changed in the 1970s with the advent of stagflation, and today most economists believe that the natural rate is higher than zero. Choices B, C, and D are incorrect because they do not accurately describe the concept of the natural rate of unemployment. While it is true that some economists may argue for a natural rate of zero in theory, this is not the prevailing view among economists. When unemployment is at its natural rate, both frictional unemployment and structural unemployment will exist.

Which of the Following Statements About the Natural Rate of Unemployment