The sum of the frictional and structural rates of unemployment is the:
A) cyclical rate of unemployment.
B) cyclical rate of employment.
C) natural rate of unemployment.
D) natural rate of employment.

Question

Quizplus · Accepted Answer

The sum of the frictional and structural rates of unemployment is often referred to as the natural rate of unemployment. This is because frictional and structural unemployment are considered inevitable and necessary for a healthy economy, representing the level of unemployment that occurs even when the economy is operating at full potential. The cyclical rate of unemployment, on the other hand, reflects the changes in unemployment that occur due to fluctuations in the business cycle.

The Sum of the Frictional and Structural Rates of Unemployment