When the economy moves into and out of recessions and expansions, the unemployment rate fluctuates around the
A) frictional unemployment rate.
B) natural unemployment rate.
C) cyclical unemployment.
D) structural unemployment rate.

Question

Quizplus · Accepted Answer

The natural unemployment rate is the rate of unemployment that exists when the economy is healthy and growing normally. As the economy moves into recessions and expansions, the unemployment rate fluctuates around this natural rate, with the cyclical unemployment rate representing the deviation from the natural rate caused by the business cycle. The frictional and structural unemployment rates, on the other hand, represent more long-term or structural factors that affect the labor market.

When the Economy Moves into and Out of Recessions and Expansions