If unemployment equals the natural unemployment rate, then there
A) is less than full employment.
B) is only frictional or structural unemployment.
C) is zero unemployment.
D) are no job openings existing at the time.

Question

Quizplus · Accepted Answer

If unemployment equals the natural unemployment rate, then there is only frictional or structural unemployment. The natural unemployment rate is the level of unemployment that exists when the labor market is in equilibrium, with no cyclical unemployment. This means that there will always be some level of unemployment due to factors such as workers quitting jobs, being fired, or transitioning between jobs. This unemployment is labeled as frictional or structural, as it is not caused by a downturn in the business cycle. Therefore, option B is the best choice.

If Unemployment Equals the Natural Unemployment Rate, Then There