If the structural unemployment rate is 4%, the frictional unemployment rate is 1%, and the cyclical unemployment rate is 3%, then the natural rate of unemployment is 5%.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the sum of structural and frictional unemployment rates, which is 4% + 1% = 5%. The cyclical unemployment rate is not included in the natural rate because it is due to temporary fluctuations in the economy.

If the Structural Unemployment Rate Is 4%, the Frictional Unemployment