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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