The Natural rate of unemployment equals
A)The sum of the frictional and structural unemployment rates.
B)The sum of the frictional and cyclical unemployment rates.
C)The sum of the structural and cyclical unemployment rates.
D)None of the above.

Question

The Natural rate of unemployment equals
A)​The sum of the frictional and structural unemployment rates.
B)​The sum of the frictional and cyclical unemployment rates.
C)​The sum of the structural and cyclical unemployment rates.
D)​None of the above.

Quizplus · Accepted Answer

The natural rate of unemployment is the rate of unemployment that exists when the labor market is in equilibrium and there is no cyclical unemployment. It is made up of two types of unemployment: frictional unemployment (unemployment resulting from people changing jobs or entering the labor force) and structural unemployment (unemployment resulting from mismatches between workers' skills and the requirements of available jobs). Therefore, the natural rate of unemployment is equal to the sum of the frictional and structural unemployment rates.

The Natural Rate of Unemployment Equals