For an economy operating on the long-run aggregate supply curve:
A) frictional unemployment is zero.
B) structural unemployment is zero.
C) cyclical unemployment is zero.
D) the natural rate of unemployment is zero.

Question

Quizplus · Accepted Answer

When an economy is operating on the long-run aggregate supply curve, it is at its full employment level, meaning that cyclical unemployment (which is associated with economic downturns) is zero. Frictional and structural unemployment can still exist, contributing to the natural rate of unemployment, which is not zero.

For an Economy Operating on the Long-Run Aggregate Supply Curve