The natural rate of unemployment is the
A)Rate that would occur if the structural deficit were zero.
B)Rate that corresponds to 3 percent inflation on the Phillips curve.
C)Long-term rate determined by structural forces in labor and product markets.
D)Amount of cyclical unemployment minus the anticipated rate of unemployment.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the long-term rate determined by structural forces in labor and product markets. It is the rate that would occur when the economy is at full employment, with no cyclical unemployment. The natural rate is not influenced by short-term factors such as changes in monetary or fiscal policy, and it can only be changed through structural reforms to labor and product markets.

The Natural Rate of Unemployment Is the