The unemployment rate that occurs in a normal functioning economy is often referred to as
A) cyclical unemployment.
B) the natural rate of unemployment.
C) seasonal unemployment.
D) labor force unemployment.

Question

Quizplus · Accepted Answer

The natural rate of unemployment, also known as the non-accelerating inflation rate of unemployment (NAIRU), is the unemployment rate that occurs in a normal functioning economy where there is neither a recession nor an expansion. It is caused by structural and frictional factors in the labor market, such as job turnover and skill mismatches, and is considered unavoidable and necessary for economic growth. Cyclical unemployment is caused by fluctuations in the business cycle, while seasonal unemployment is caused by seasonal fluctuations in demand for labor, such as agriculture or tourism. Labor force unemployment is not a commonly used term in economics.

The Unemployment Rate That Occurs in a Normal Functioning Economy