The natural rate of unemployment consists of

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the rate of unemployment that exists in the absence of cyclical unemployment, which means it only consists of structural and frictional unemployment. Option A is incorrect because in the natural rate, some workers must be looking for employment. Option B is incorrect because seasonal unemployment accounts for a small fraction of overall unemployment and is a type of frictional unemployment. Option C is incorrect because structural unemployment is only one component of the natural rate, and frictional unemployment is the other.

The Natural Rate of Unemployment Consists of