In the long run, the unemployment rate
A) is zero.
B) is equal to the natural unemployment rate.
C) can take on any value.
D) is equal to the expected unemployment rate.
E) must be equal to the expected inflation rate.

Question

Quizplus · Accepted Answer

The natural unemployment rate is the rate of unemployment that is consistent with full employment in the economy. It accounts for frictional and structural unemployment that is present even in a healthy employment environment. In the long run, the unemployment rate is expected to converge to the natural rate of unemployment, so B is the correct answer option.

In the Long Run, the Unemployment Rate