The natural rate of unemployment includes
A)frictional and cyclical unemployment.
B)only cyclical unemployment.
C)only unemployment due to layoffs and corporate downsizing.
D)frictional unemployment and structural unemployment.

Question

Quizplus · Accepted Answer

The natural rate of unemployment includes both frictional and structural unemployment. Cyclical unemployment is not considered part of the natural rate because it is due to fluctuations in the business cycle and is not a long-term or structural issue. Layoffs and corporate downsizing may contribute to the overall unemployment rate, but they are not the only factors shaping the natural rate.

The Natural Rate of Unemployment Includes