Economists are able to estimate the natural rate of unemployment in the United States:
A) very precisely.
B) in a 95 percent confidence interval of 2 to 3 percentage points.
C) in a 95 percent confidence interval of 10 to 20 percentage points.
D) only in years when there are no supply shocks.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is estimated with a 95 percent confidence interval of 2 to 3 percentage points, which means there is some level of uncertainty in the estimation. It cannot be estimated very precisely, nor is the confidence interval as large as 10 to 20 percentage points. The estimation can still be made in years when there are supply shocks, although it may be more difficult.

Economists Are Able to Estimate the Natural Rate of Unemployment