Assume that expectations of the price level and productivity are accurate. For this economy, we know that the natural rate of unemployment should depend on which of the following?
A) Neither the level of productivity nor its rate of growth.
B) The level of productivity, but not its rate of growth.
C) Both the level of productivity and its rate of growth.
D) The level of productivity, its rate of growth, and the history of its recent change.
E) The rate of growth of productivity, but not its level.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is primarily determined by factors such as labor market policies, labor laws, and the efficiency of the labor market, rather than the level or growth rate of productivity.

Assume That Expectations of the Price Level and Productivity Are