The natural level of output is:
A) affected by aggregate demand.
B) the level of output at which the unemployment rate is zero.
C) the level of output at which the unemployment rate is at its natural level.
D) permanent and unchangeable.

Question

Quizplus · Accepted Answer

The natural level of output is the level of output at which the unemployment rate is at its natural level, meaning the rate of unemployment that would exist even in a healthy economy without any cyclical fluctuations. It is not affected by aggregate demand and it is not permanent or unchangeable.

The Natural Level of Output Is