The natural rate of unemployment will help determine
A)the open economy effect.
B)the position of the long-run aggregate supply curve.
C)the level of economic growth in the economy.
D)low levels of inflation.

Question

Quizplus · Accepted Answer

The natural rate of unemployment represents the level of unemployment that exists when the economy is operating at its potential output. This potential output is reflected in the position of the long-run aggregate supply curve, which represents the level of output that can be produced in the long run when all factors of production are utilized. Therefore, the natural rate of unemployment is directly linked to the position of the long-run aggregate supply curve.

The Natural Rate of Unemployment Will Help Determine