Refer to the diagram. The natural rate of unemployment for this economy is
A) 3 percent.
B) 5 percent.
C) 6 percent.
D) 9 percent.

Question

Refer to the diagram. The natural rate of unemployment for this economy is
A) 3 percent. 
B) 5 percent. 
C) 6 percent. 
D) 9 percent.

Quizplus · Accepted Answer

The natural rate of unemployment is represented by the vertical line labeled "LRAS" (Long-Run Aggregate Supply) in the diagram. This line intersects with the aggregate demand curve (labeled "AD") at a point that corresponds to a 5 percent unemployment rate. Therefore, the natural rate of unemployment for this economy is 5 percent, making choice B the correct answer.

Refer to the Diagram