If frictional unemployment increased, but structural unemployment decreased by more, the natural rate of unemployment:
A)Would increase
B)Would not change
C)Would decrease
D)Would be affected in an unpredictable manner

Question

If frictional unemployment increased, but structural unemployment decreased by more, the natural rate of unemployment:
A)​Would increase
B)​Would not change
C)​Would decrease
D)​Would be affected in an unpredictable manner

Quizplus · Accepted Answer

Frictional and structural unemployment are two components of the natural rate of unemployment. If frictional unemployment increases but structural unemployment decreases by a greater amount, then the overall natural rate of unemployment would decrease due to the net decrease in unemployment.

If Frictional Unemployment Increased, but Structural Unemployment Decreased by More