The relationship between the unemployment rate and the natural unemployment rate is that the unemployment rate
A) fluctuates about the natural rate.
B) equals the natural rate.
C) is always below the natural rate.
D) is always above the natural rate.

Question

Quizplus · Accepted Answer

The unemployment rate fluctuates around the natural unemployment rate due to cyclical, frictional, and structural factors affecting the economy. The natural rate represents the level of unemployment that would exist in an economy without short-term cyclical fluctuations.

The Relationship Between the Unemployment Rate and the Natural Unemployment