The "natural" rate of unemployment is the unemployment rate toward which the economy gravitates in the

a. short run, and the natural rate is not necessarily the socially optimal rate of unemployment.

b. long run, and the natural rate is the socially optimal rate of unemployment.

c. long run, and the natural rate is not necessarily the socially optimal rate of unemployment.

d. short run, and the natural rate is the socially optimal rate of unemployment.

Question

Business

Gemma Acevedo

9 August, 12:29

The "natural" rate of unemployment is the unemployment rate toward which the economy gravitates in the

a. short run, and the natural rate is not necessarily the socially optimal rate of unemployment.

b. long run, and the natural rate is the socially optimal rate of unemployment.

c. long run, and the natural rate is not necessarily the socially optimal rate of unemployment.

d. short run, and the natural rate is the socially optimal rate of unemployment.

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Answers (1)

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Camron Hess · Answer 1

The "natural" rate of unemployment is the unemployment rate toward which the economy gravitates in the long run, and the natural rate is not necessarily the socially optimal rate of unemployment. The natural rate of unemployment exists when the labor and markets are at an equilibrium. Although in theory having them equal seems like the best option for the economy, it is good to have some wiggle room in labor and available jobs.