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

Question

Quizplus · Accepted Answer

The unemployment rate fluctuates around the natural unemployment rate during business cycles. The natural unemployment rate is the rate of unemployment that exists when the economy is at full employment and there is no cyclical unemployment. It includes only structural and frictional unemployment. Cyclical unemployment is the unemployment caused by an economic recession, and it causes the unemployment rate to rise above the natural rate during recessions.

When the Economy Moves into and Out of Recessions and Expansions