Question

The natural rate of unemployment:_______. a. means that the economy will always operate at that rate. b. is equal to the total of frictional and structural unemployment. c. is a fixed unemployment rate that does not change over time. d. means that the economy will always realize its potential output.

Answer 1

Answer:

B. is equal to the total of frictional and structural unemployment.

Explanation:

The natural rate of unemployment is the sum of frictional and structural unemployment at any given time. Economists estimate that for the United States this rate is around 3.5%.

Unemployment has a natural rate because no matter how good the economy is doing, some people either do not want to work, are in between jobs (frictional unemployemt), or lack the skills necessary to get employed and need to undergo training (structural unemployment).