The natural rate of unemployment
I.includes frictional and structural unemployment.
II.is equal to zero when an economy is producing at a point on its production possibilities frontier.
III.is the unemployment rate that exists when the quantity of labor demanded is equal to the quantity of labor supplied.

Question

Quizplus · Accepted Answer

The natural rate of unemployment includes frictional and structural unemployment (I), but it is not zero when an economy is producing on its production possibilities frontier (II) because there can still be frictional and structural unemployment even when the economy is operating at full capacity. The natural rate of unemployment is the unemployment rate that exists when the quantity of labor demanded is equal to the quantity of labor supplied (III). Therefore, options I and III are correct, and option II is not.

The Natural Rate of Unemployment