The natural rate of unemployment:
A)is the sum of both frictional and structural unemployment when they are at a maximum.
B)includes only frictional unemployment.
C)includes only structural unemployment.
D)includes only cyclical unemployment.

Question

The natural rate of unemployment:
A)​is the sum of both frictional and structural unemployment when they are at a maximum.
B)​includes only frictional unemployment.
C)​includes only structural unemployment.
D)​includes only cyclical unemployment.

Quizplus · Accepted Answer

The natural rate of unemployment is the sum of frictional and structural unemployment when the economy is at full employment, not at their maximum. Cyclical unemployment, which is related to the business cycle, is not included in the natural rate.

The Natural Rate of Unemployment