If there is 3 percent frictional unemployment, 4 percent structural unemployment, and −2 percent cyclical unemployment, then the natural rate of unemployment equals:
A)1 percent.
B)2 percent.
C)5 percent.
D)7 percent.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the part of the total unemployment rate that is attributable to frictional and structural unemployment; in this case it is 3 + 4 = 7 percent.

If There Is 3 Percent Frictional Unemployment, 4 Percent Structural