When the rate of unemployment is equal to the sum of seasonal,frictional and structural unemployment rates then:
A)the natural rate of unemployment must also be zero.
B)the rate of frictional unemployment must be negative.
C)the economy must have entered a recessionary stage.
D)the Keynesian aggregate supply curve must be horizontal.
E)the economy is considered to be at full employment.

Question

Quizplus · Accepted Answer

When the rate of unemployment is equal to the sum of seasonal, frictional, and structural unemployment rates, it indicates that there is no cyclical unemployment (which is caused by a lack of demand in the economy). This is considered to be the natural rate of unemployment, and it represents the minimum unemployment rate that can be achieved without causing inflation. Therefore, the economy is considered to be at full employment.

When the Rate of Unemployment Is Equal to the Sum