If the economy is operating at the natural rate of unemployment, _____.
A)frictional unemployment will be zero
B)structural unemployment will be zero
C)cyclical unemployment will be zero
D)the unemployment rate will equal zero
E)seasonal unemployment will be zero

Question

Quizplus · Accepted Answer

The natural rate of unemployment consists of frictional and structural unemployment, which are considered to be unavoidable in a healthy economy. Therefore, there will still be some level of unemployment even at the natural rate. Cyclical unemployment, which is caused by downturns in the business cycle, is the only type of unemployment that can be eliminated by operating at the natural rate. Thus, at the natural rate of unemployment, cyclical unemployment will be zero, but frictional and structural unemployment will still exist.

If the Economy Is Operating at the Natural Rate of Unemployment