When an economy is at its natural rate of unemployment,which of the following will be true?
A)The unemployment rate will be 0%.
B)The labor force participation rate will be 100%.
C)The unemployment rate will be greater than 0%.
D)Only structural unemployment as a result of technological change will exist in the economy.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the rate at which there is no cyclical unemployment in the economy, meaning that all unemployment is due to frictional or structural factors. This rate is typically estimated to be around 4-5% in most developed countries. Therefore, there will still be some unemployment in the economy at the natural rate, with the unemployment rate typically ranging from 4-5%. The labor force participation rate may or may not be at 100%, depending on individual choices and preferences. Finally, while structural unemployment may be present, frictional unemployment can also exist due to factors such as job search and retraining times.

When an Economy Is at Its Natural Rate of Unemployment,which