If the economy is in long-run equilibrium,the actual unemployment rate is less than the natural unemployment rate.

Question

Quizplus · Accepted Answer

If the economy is in long-run equilibrium, the actual unemployment rate should be equal to the natural unemployment rate. This is because in the long-run, the economy will produce at its potential output and the labor market will clear, with no excess supply or demand for labor. Therefore, there should be no cyclical unemployment, and the actual unemployment rate should be equal to the natural rate of unemployment, which includes only structural and frictional unemployment.

If the Economy Is in Long-Run Equilibrium,the Actual Unemployment Rate