The natural rate of unemployment
A) can vary over time and deﬁnes the location of the long-run aggregate supply curve.
B) is constant over time and deﬁnes the location of the long-run aggregate supply curve.
C) varies over time in response to changes in aggregate demand.
D) is inversely related to the price level.

Question

Quizplus · Accepted Answer

The natural rate of unemployment can indeed vary over time due to changes in the labor market, technology, policy, and other factors. It is associated with the long-run aggregate supply curve because it represents the level of unemployment that the economy experiences when it is at its potential output, or full employment, which does not change with the price level or short-term fluctuations in demand.

The Natural Rate of Unemployment