Which of the following is correct? The natural rate of unemployment
A)is a zero unemployment rate.
B)has been steady at 3 percent over the past decade.
C)is defined by Friedman as that rate of unemployment "in which everyone who wants a job can have a job."
D)is the unemployment rate that exists in the long-run.
E)None of the above

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the unemployment rate that exists in the long-run, which is determined by structural factors such as demographics, technology, and labor market institutions. It is not zero (A), is not necessarily steady over time (B), and although Friedman did offer a definition of the natural rate of unemployment, it is not universally accepted (C).

Which of the Following Is Correct? the Natural Rate of Unemployment