The long-term rate of unemployment,determined by structural forces in labor and product markets,defines the
A)Frictional rate of unemployment.
B)Seasonal rate of unemployment.
C)Natural rate of unemployment.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the long-term rate of unemployment that is determined by the structural forces in labor and product markets. It includes frictional and structural unemployment but excludes cyclical unemployment, which is caused by fluctuations in the business cycle. Therefore, choice C is the correct answer. Choices A and B refer to short-term rates of unemployment that are affected by temporary factors such as job search and seasonal fluctuations.

The Long-Term Rate of Unemployment,determined by Structural Forces in Labor