The natural rate of unemployment is the amount of unemployment
A)equal to frictional and cyclical unemployment.
B)equal to frictional plus structural unemployment.
C)that exists when the economy goes into recession.
D)that exists when the economy is in an expansion.
E)equal to seasonal and cyclical unemployment.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the amount of unemployment that exists when the labor market is in equilibrium, meaning there is neither a cyclical nor a structural surplus or shortfall of labor. Therefore, the natural rate of unemployment equals the sum of frictional unemployment (short-term unemployment that arises from the process of matching workers with jobs) and structural unemployment (longer-term unemployment caused by mismatches between workers' skills and employers' needs).

The Natural Rate of Unemployment Is the Amount of Unemployment