The cyclical rate of unemployment plus the measured unemployment rate equal the natural rate of unemployment.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is considered to be the sum of frictional and structural unemployment, not the sum of cyclical unemployment and the measured unemployment rate. Cyclical unemployment varies with the business cycle, whereas the natural rate reflects longer-term non-cyclical factors.

The Cyclical Rate of Unemployment Plus the Measured Unemployment Rate