In the long run, the unemployment rate
A) is zero.
B) is equal to the expected unemployment rate.
C) must be equal to the expected inflation rate.
D) is equal to the natural unemployment rate.
E) can take on any value.

Question

Quizplus · Accepted Answer

In the long run, the unemployment rate stabilizes at the natural unemployment rate, which includes frictional and structural unemployment but not cyclical unemployment. This concept is fundamental in economics, indicating the level of unemployment that the economy naturally gravitates towards in the long term, absent of cyclical fluctuations.

In the Long Run, the Unemployment Rate