When the actual rate of unemployment is equal to the natural rate of unemployment, we conclude that there is no cyclical unemployment.

Question

Quizplus · Accepted Answer

This is because the natural rate of unemployment is made up of structural and frictional unemployment, which are not affected by the business cycle. Therefore, when the actual rate of unemployment equals the natural rate, there is no additional unemployment caused by the business cycle, which is referred to as cyclical unemployment.

When the Actual Rate of Unemployment Is Equal to the Natural