A nation's natural rate of output is the output level that occurs when:
A) there is no government policy interference.
B) the unemployment rate is zero.
C) the economy is at full employment.
D) only cyclical unemployment is present.

Question

Quizplus · Accepted Answer

The natural rate of output occurs when the economy is at full employment, which means all resources, including labor, are being used efficiently, but does not imply zero unemployment. It accounts for frictional and structural unemployment but not cyclical unemployment.

A Nation's Natural Rate of Output Is the Output Level