If the natural unemployment rate is 5.5 percent,then the economy is at long-run equilibrium when the actual unemployment rate is
A) more than 5.5 percent.
B) between 0 and 5.5 percent.
C) 0 percent.
D) 5.5 percent.
E) none of the above

Question

Quizplus · Accepted Answer

The natural unemployment rate is the rate at which there is only frictional and structural unemployment, and no cyclical unemployment. Long-run equilibrium occurs when the actual unemployment rate equals the natural unemployment rate. Therefore, the actual unemployment rate should be equal to 5.5 percent to achieve long-run equilibrium.

If the Natural Unemployment Rate Is 5