The rate of unemployment when the economy is at its potential output is called the:

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the rate of unemployment that exists when the economy is at its potential output, meaning all available resources are being utilized efficiently. This rate includes structural and frictional unemployment, so choices C and D are not the best answers. Choice A is not specific enough and implies that there is a 0% unemployment rate, which is unlikely and unrealistic.

The Rate of Unemployment When the Economy Is at Its