Which of the following is true of the natural unemployment rate?

Question

Quizplus · Accepted Answer

The natural unemployment rate is the rate of unemployment that exists when the labor market is in equilibrium and there is no cyclical unemployment. It is not zero when the economy is not in a recession (option A is incorrect). The natural rate of unemployment is not fixed; while it has been around 4% during the post-World War II period, it has varied over time (option B is incorrect). The natural unemployment rate is composed of structural and frictional unemployment, so it is higher when these types of unemployment are higher (option C is correct). The natural rate of unemployment can change over time, but it is unlikely that it would change dramatically within a matter of months (option D is incorrect).

Which of the Following Is True of the Natural Unemployment