The natural unemployment rate fluctuates very little over time.

Question

Quizplus · Accepted Answer

The natural unemployment rate is the rate at which the economy is at full employment, which is also called the non-accelerating inflation rate of unemployment (NAIRU). It is determined by structural factors such as demographics, technology, and institutions. While the natural unemployment rate is not fixed, it tends to be stable over time, within a narrow range of 4% to 6% in the United States. This stability is due to the fact that the long-run equilibrium in the labor market is governed by supply and demand factors that do not change rapidly or drastically. Therefore, the natural unemployment rate can be considered a relatively constant benchmark for assessing the health of the economy's job market.

The Natural Unemployment Rate Fluctuates Very Little Over Time