When the economy is operating at the natural rate of unemployment _____ unemployment is zero.
A) frictional
B) structural
C) cyclical
D) the sum of frictional unemployment and structural

Question

Quizplus · Accepted Answer

Cyclical unemployment is directly related to the level of economic activity. When the economy is operating at the natural rate of unemployment, it means the economy is at full employment, and there is no cyclical unemployment because cyclical unemployment arises during periods of economic downturns or recessions. Frictional and structural unemployment can still exist at the natural rate of unemployment, as they are not directly tied to economic cycles in the same way.

When the Economy Is Operating at the Natural Rate of Unemployment