If an economy is operating at its natural level of employment, unemployment is equal to zero.

Question

Quizplus · Accepted Answer

While the natural level of employment represents the level of output that an economy can sustainably produce given its resources, it does not necessarily imply zero unemployment. Some unemployment, such as frictional and structural unemployment, can still exist even when the economy is operating at its potential output level.

If an Economy Is Operating at Its Natural Level of Employment