If the structural unemployment rate is 3%, the frictional unemployment rate is 2%, and the cyclical unemployment rate is 4%, then the natural rate of unemployment is 9%.

Question

Quizplus · Accepted Answer

The sum of the structural, frictional, and natural unemployment rates should equal the actual unemployment rate, not the cyclical unemployment rate. Therefore, the natural rate of unemployment would be 5% (3% + 2%).

If the Structural Unemployment Rate Is 3%, the Frictional Unemployment