The natural rate of unemployment

Question

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The natural rate of unemployment is the rate that exists in long-run macroeconomic equilibrium. It refers to the level of unemployment that remains in the economy even in the absence of cyclical fluctuations. This rate is determined by structural factors such as the labor market institutions, the level of job mobility, and the efficiency of job matching. In the long-run, wages and prices are flexible, and all workers and employers have fully adjusted to any changes in the economy, so the economy operates at its potential output level, and the natural rate of unemployment prevails.

The Natural Rate of Unemployment