Which of the following defines the natural rate of unemployment?
A) the unemployment rate that excludes seasonal unemployment
B) the unemployment rate that excludes structural unemployment
C) the unemployment rate when none of the work force is unemployed longer than six weeks
D) the unemployment rate at which the economy is producing at its potential GDP

Question

Which of the following defines the natural rate of unemployment?  
A) the unemployment rate that excludes seasonal unemployment 
B) the unemployment rate that excludes structural unemployment 
C) the unemployment rate when none of the work force is unemployed longer than six weeks 
D) the unemployment rate at which the economy is producing at its potential GDP

Quizplus · Accepted Answer

The natural rate of unemployment is the unemployment rate at which the economy is producing at its potential GDP. It is also known as the full-employment rate of unemployment, and it includes both structural and frictional unemployment but excludes cyclical unemployment. The other options (A, B, and C) are not accurate definitions of the natural rate of unemployment.

Which of the Following Defines the Natural Rate of Unemployment