The natural rate of unemployment is generally thought of as the:
A) sum of the structural unemployment and cyclical unemployment rates.
B) sum of the frictional unemployment and structural unemployment rates.
C) ratio of the frictional unemployment rate to the cyclical unemployment rate.
D) sum of the frictional unemployment and cyclical unemployment rates.

Question

Quizplus · Accepted Answer

The natural rate of unemployment includes both frictional and structural unemployment, as these are considered "normal" levels of unemployment that exist even when the economy is functioning at full capacity. Cyclical unemployment, on the other hand, is caused by fluctuations in the business cycle and is not part of the natural rate. Therefore, the natural rate of unemployment is best represented by the sum of frictional and structural unemployment rates.

The Natural Rate of Unemployment Is Generally Thought of as The