The natural rate of unemployment includes unemployment that is
Correct answer: C. Frictional and structural
- A. Only caused by recessions
- B. Only caused by seasonal work
- C. Frictional and structural
- D. Created by excess demand
Explanation
The natural rate consists mainly of frictional and structural unemployment that exists even when the economy operates near potential output. Cyclical unemployment is associated with insufficient aggregate demand and is not part of the natural rate.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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