The natural rate of unemployment is defined as the rate of:

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the rate of non-accelerating inflation or the rate at which inflation remains stable, which is why cyclical unemployment is not included in its calculation. The natural rate of unemployment consists of two components: structural unemployment, which occurs due to changes in the structure of an economy, and frictional unemployment, which results from short-term transitions between jobs. Therefore, the correct answer is C, which includes both structural and frictional unemployment in the definition of the natural rate of unemployment.

The Natural Rate of Unemployment Is Defined as the Rate