According to new classical economics, over the long run the economy will operate:
A) at full employment.
B) with zero unemployment.
C) at the natural rate of unemployment.
D) with significant unemployment because of misguided government policies.

Question

Quizplus · Accepted Answer

New classical economics posits that over the long run, the economy will operate at the natural rate of unemployment, which includes frictional and structural unemployment but not cyclical unemployment. This concept suggests that the economy self-adjusts to achieve full employment, where full employment does not mean zero unemployment but the natural rate of unemployment.

According to New Classical Economics, Over the Long Run the Economy