Question

The natural rate of unemployment is the: Question 10 options: a) full-employment unemployment rate. b) unemployment rate experienced by the most-skilled workers in the economy. c) unemployment rate experienced by the least-skilled workers in the economy. d) unemployment rate experienced at the depth of a depression.

Answer 1

Answer:

c) Unemployment rate experienced by the least-skilled workers in the economy.

Explanation:

The natural rate of unemployment is the sum of frictional unemployment and structural unemployment that still remains when the economy is at full employment.

This means that even in a economy that is running at full force, there will still be some people left behind in the labor force.

These are people either in frictional unemployment because they are in between jobs, or people in structural unemployment because their skills are lagging behind and cannot be employed in the current economy unless the acquired a new skillset.

Therefore, the natural rate of unemployment is the one that is experienced by the least-skilled workers in an economy.